* Gold boosted as dollar hits 8-month low vs euro
* Japan's monetary easing boosts risk appetite
* SPDR gold ETF records third straight session of outflows
* Coming up: US ADP private employment report due Wed.
(Recasts, updates prices to market close, adds links to
graphics)
By Frank Tang
NEW YORK, Oct 5 (Reuters) - Gold jumped nearly 2 percent on
Tuesday, its biggest one-day rise since May, resuming its march
to record highs as the dollar tumbled and currency market
volatility ignited safe-haven buying.
Silver surged 3 percent to a 30-year high and platinum
group metals also rallied with the entire commodities complex,
after the Bank of Japan said it would pump more funds into the
country's struggling economy and keep interest rates virtually
at zero. []
Moves by countries around the world toward easier money
indicate "not only the amount of liquidity that has been put
into the system will remain, but there is a high likelihood of
significant level of liquidity being added into the system,"
said Frank McGhee, head precious metals trader at Integrated
Brokerage Services.
McGhee said expected monetary easing in the United States
will result in major devaluation on the dollar, which benefits
gold.
Spot gold <XAU=> rose $25.30, or 1.9 percent, to $1,340.50
an ounce at 2:59 p.m. EDT (1859 GMT), off an intra-day high of
$1,341.20, its seventh record in the past eight sessions. U.S.
gold futures for December delivery <GCZ0> settled up $23.50 at
$1,340.30 an ounce.
The dollar <.DXY> tumbled to a near nine-month low against
a basket of six major currencies, pressured by broad-based
demand for the euro. []
The usual inverse relationship between gold and dollar has
showed signs of strengthening of late. The 25-day correlation
between the metal and the the U.S. currency has increased to a
negative 0.5, the strongest inverse link since May.
(Graphic: http://link.reuters.com/wah96p)
Brazil on Monday doubled a tax on foreign investors buying
local bonds in an attempt to curb a currency rally that has
turned into an issue in the South American country's
presidential race. []
On charts, gold's two-percent rally on Tuesday lifted
prices above its upper resistance of a rising channel which
started back in July.
(Graphic: http://link.reuters.com/weh96p)
But some traders said gold's upside could be limited. They
noted slower physical demand, a third straight outflow of funds
from the world's biggest gold ETF and improved demand for U.S.
equities, which rallied 2 percent on Tuesday.
BNP Paribas analyst Anne-Laure Tremblay said the euro may
see a correction later this year on deflation risks in the euro
zone, and added that stronger risk appetite could favor
equities and other assets besides gold.
PARABOLIC GOLD?
Integrated Brokerage Services' McGhee said gold's sharp
rallies are starting to turn parabolic, and that could trigger
a price correction.
"It's almost impossible to pick a level when it will run
out of steam. When it does, it will turn around very quickly,
because it has nothing to support from a technical standpoint,"
McGhee said.
Demand for physical gold retreated as prices rose again.
Buying in main gold consumer India was muted as the weaker
rupee pressured local buyers. []
Holdings of the world's largest gold-backed exchange-traded
fund, New York's SPDR Gold Trust <GLD>, declined for a third
session, while those of the largest silver ETF, the iShares
Silver Trust <SLV> dipped from record highs. []
Silver <XAG=> surged nearly 4 percent to $22.83 an ounce,
near its 30-year high at $22.87. Silver continued to outperform
gold, with the number of ounces of silver needed to buy an
ounce of gold slipping to a one-year low at around 59.
(Graphic: http://link.reuters.com/hun72k)
Platinum <XPT=>, buoyed by strength in gold, hit a 4-1/2
month high at $1,699 an ounce and was trading up 1.6 percent at
$1,691.50, while palladium <XPD=> rose 3.2 percent to $575.50.
Prices at 3:08 p.m. EDT (1908 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1340.30 23.50 1.8% 22.3%
US silver <SIZ0> 22.737 0.701 0.0% 35.0%
US platinum <PLF1> 1700.70 28.60 1.7% 15.6%
US palladium <PAZ0> 578.20 16.90 3.0% 41.4%
Gold <XAU=> 1340.25 25.05 1.9% 22.2%
Silver <XAG=> 22.81 0.84 3.8% 35.5%
Platinum <XPT=> 1691.50 26.65 1.6% 15.4%
Palladium <XPD=> 575.50 17.67 3.2% 41.9%
Gold Fix <XAUFIX=> 1330.50 4.75 0.4% 20.5%
Silver Fix <XAGFIX=> 22.24 21.00 1.0% 30.9%
Platinum Fix <XPTFIX=> 1689.00 8.00 0.5% 15.2%
Palladium Fix <XPDFIX=> 569.00 3.00 0.5% 41.5%
(Reporting by Frank Tang; Editing by David Gregorio and Sofina
Mirza-Reid)
