PRECIOUS-Gold hits record above $1,095/oz as dollar drops

                                
 * Gold hits record for second straight day, near $1,100/oz
                                
 * Dollar drops more after Fed says plans to keep rates low
                                
 * Technical analyst Prechter says gold rally overdone
 (Recasts, updates with Fed statement, market activity, closing
prices, changes dateline, previous LONDON)
                                
 By Frank Tang
                                
 NEW YORK, Nov 4 (Reuters) - Gold hit a record high for a
second straight day on Wednesday, moving within striking
distance of $1,100 an ounce as the dollar dropped broadly after
the Federal Reserve said it intended to keep interest rates low
for some time.
                                
 The dollar weakness against the euro and a basket of major
currencies added to momentum triggered by India's purchase of
200 tonnes of gold from the International Monetary Fund.
                                
 "The Fed is still looking at the low rates for an extended
period of time. The easy monetary policy is here to stay for a
little longer. The conditions remain in place for gold to
continue to move higher," said Tom Hartmann, broker at
California-based Altavest.
                                
 The Federal Reserve on Wednesday expressed growing
confidence that a U.S. economic recovery was building, and it
committed to keep borrowing costs near zero. It also left
benchmark rates unchanged in a range of zero to 0.25 percent.
[ID:nN04453484]
                                
 "The Fed's reasoning for feeling comfortable with keeping
rates low is that it doesn't see inflation fundamentals in the
market. That may be true in the classic sense of inflation, but
if we look at how the falling dollar is affecting commodity
prices, that is inflation," Hartmann said.
                                
 Spot gold <XAU=> struck a high of $1,097.25 an ounce after
the Fed statement, and was last at $1,096.45 an ounce at 3:25
p.m. EST (2025 GMT) against $1,084.50 late in New York on
Tuesday.
                                
 Traders also cited strong sentiment after the IMF said
earlier this week that it had sold 200 tonnes of gold to the
Reserve Bank of India, half of a long-planned bullion sale that
had threatened to slow gold's ascent. [ID:nSP375900]
                                
 "India has (prompted) new speculation of pent-up demand for
gold diversification by central banks," said Michael Lewis,
head of commodities research at Deutsche Bank.
                                
 Market watchers are now speculating over the destination of
the remaining 403 tonnes of gold the IMF has to sell.
                                
 Weakness in the dollar has added to this momentum, dealers
said. The dollar index fell in choppy trade against the euro
after the Fed statement. [FRX/]
                                
 Gold typically moves in the opposite direction of the
dollar. Strength in the U.S. unit makes gold, like all
dollar-priced commodities, more expensive for holders of other
currencies and cuts its appeal as an alternative asset.
                                
 Spot gold prices also rose to an eight-month peak in euro
terms <XAUEUR=R> at 741.77 euros, and hit their highest since
early June when denominated in Australian dollars <XAUAUD=R>,
at A$1,206.74.
                                
 RECORD HIGHS
                                
 Prior to the Fed's interest rate decision, U.S. December
gold futures <GCZ9> settled up $2.40 at $1,087.30 an ounce on
the COMEX division of the New York Mercantile Exchange.
                                
 Demand for physical gold showed some signs of life, with
holdings of the largest bullion exchange-traded fund, New
York's SPDR Gold Trust <GLD>, rising nearly five tonnes.
                                
 As gold prices reached record highs on Wednesday, long-time
technical analyst Robert Prechter said the rally is overdone.
Prechter is known for predicting the 1987 stock market crash.
[ID:nN0440942]
                                
 Among other precious metals, spot silver <XAG=> rose to
$17.46, tracking gains in gold, against $17.20. Platinum <XPT=>
was at $1,367 an ounce against $1,355.50.
                                
 Palladium <XPD=> rose to $327 after stronger-than-expected
U.S. car sales numbers late on Tuesday, against $324.50 late in
the previous session in New York. [ID:nN03518892]
                                
 For timeline on gold's climb to record highs, click on:
http://graphics.thomsonreuters.com/109/GLD/GLD_TMLN1009.html
                                
                     Close  Change   Pct     2008    YTD
                                
                                     Chg   Close   % Chg
US gold      <GCZ9>    1087.30     2.4   0.2   884.3    23.0
US silver    <SIZ9>     17.405   0.225   1.3  11.295    54.1
US platinum  <PLF0>    1369.30   13.10   1.0  941.50    45.4
US palladium <PAZ9>     328.80    1.05   0.3  188.70    74.2
Prices at 3:24 p.m. EST (2024 GMT)
Gold         <XAU=>    1095.55   11.05   1.0  878.20    24.7
Silver       <XAG=>      17.47    0.27   1.6   11.30    54.6
Platinum     <XPT=>    1367.50   12.00   0.9  924.50    47.9
Palladium    <XPD=>     326.50   2.000   0.6  184.50    77.0
Gold Fix     <XAUFIX=> 1090.00   -1.75  -0.2  836.50    30.3
Silver Fix   <XAGFIX=>   17.48  113.00   6.9   14.76    18.4
Platinum Fix <XPTFIX=> 1359.00    1.00   0.1    1529   -11.1
Palladium Fix<XPDFIX=>  330.00    1.00   0.3   365.0    -9.6
 (Additional reporting by Jan Harvey in London)