* Inflation worries also support gold
* SPDR Gold holdings <XAUEXT-NYS-TT> flat
By Miho Yoshikawa
TOKYO, Sept 16 (Reuters) - Gold rose to hover around $1,010
on Wednesday as the dollar hit a one-year low against a basket of
major currencies, boosting the metal's appeal as an alternative
investment.
Growing optimism about the economy has prompted investors to
sell the dollar and snap up riskier assets such as stocks and
commodities, helping to lift gold above $1,000 an ounce last
week.
Kazuhiko Saito, chief analyst at Tokyo's Fujitomi Co Ltd,
said inflation risks were also helping to support gold, which
investors see as hedge against the erosion of paper assets.
"We have those comments from the Fed about the economy on the
mend, but there are still worries about inflation," Saito said.
Federal Reserve Chairman Ben Bernanke said on Tuesday that
the recession was likely over, while data supported hopes that a
recovery from the worst downturn in decades was advancing.
[]
Spot gold <XAU=> was trading at $1,007.55 an ounce, against
the U.S. notional close of $1,005.90. It rose as high as
$1,011.55 on Friday, its highest since March 2008.
U.S. gold futures for December delivery <GCZ9> were at
$1,009.4 an ounce, up 0.3 percent. They rose to $1,013.70 on
Friday, the highest since February.
The dollar index, which measures the dollar's value against a
basket of six major currencies, fell to a one-year low of 76.406
<.DXY> before paring losses to 76.475, down 0.1 percent on the
day. []
Many analysts see gold prices rising further.
Economist Martin Murenbeeld told the Denver Gold Forum on
Tuesday that the price of gold could rise above $1,110 in 2010 as
central banks diversify their reserves into gold due to the
faltering dollar. []
The high prices have also prompted more selling of gold
scrap.
"Because of the high price we are seeing some gold scrap back
in the market ... but not as strong as in the first quarter,"
Dick Poon, manager of precious metals at Heraeus in Hong Kong,
said.
Buying based on technical charts has also contributed to
gold's bull run, but in contrast high prices have caused
individual investors to think twice about buying physical gold.
Money inflows into gold-backed securities remained slow.
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said its holdings stood at 1,078.851
tonnes as of Sept. 15, unchanged from the previous business day.
[]
PRICES
Precious metals prices at 0243 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1007.60 1.70 +0.17 14.48
Spot Silver 17.02 0.05 +0.29 50.35
Spot Platinum 1322.50 -0.50 -0.04 41.90
Spot Palladium 293.00 1.50 +0.51 58.81
TOCOM Gold 2958.00 26.00 +0.89 14.96 21879
TOCOM Platinum 3871.00 49.00 +1.28 45.97 7217
TOCOM Silver 496.60 13.40 +2.77 55.53 306
TOCOM Palladium 865.00 5.00 +0.58 57.27 149
Euro/Dollar 1.4664
Dollar/Yen 90.93
TOCOM prices in yen per gram, except TOCOM silver which is priced
in yen per 10 grams. Spot prices in $ per ounce.
(Reporting by Miho Yoshikawa; Editing by Chris Gallagher)
