* Renewed prospects for Fed quantitative easing helps gold
* Dollar hits fresh five-month low versus euro
* U.S. consumer confidence lowest since February
(Recasts, updates prices, quotes, changes byline,
dateline)
By Carole Vaporean
NEW YORK, Sept 28 (Reuters) - Gold surged to a new record
peak on Tuesday as several reports heightened prospects that
central banks would stimulate the economy with new liquidity,
driving the euro to a fresh five-month high against the dollar
and triggering a series of automatic buy orders.
A weaker U.S. confidence reading and separate reports
projecting quantitative easing steps by the U.S. Federal
Reserve by its next meeting and by the Bank of England
undermined the dollar, also sent silver to a 30-year high.
Spot gold <XAU=> set a new record at $1.310.10 an ounce,
before edging down to $1,308.85 an ounce at 3:45 p.m. EDT (1945
GMT), up from Monday's closing bid at $1,296.05.
U.S. gold futures for December delivery <GCZ0> closed up
$9.70 at $1,308.30 an ounce on the COMEX division of the NYMEX.
It reached a fresh all-time top at $1,311.80.
COMEX estimated final gold volume at 208,540 lots, nearly
double the 30-day average and its heaviest tally in two months.
Moreover, gold's open interest rose to new record at 616,130
lots on Monday and likely added to that total on Tuesday.
While several factors conspired to send gold to record
peaks, most significant was the dilutive effect on the dollar
if the Fed did embark on further measures to inject liquidity
into the U.S. money market, said Peter Buchanan, senior
economist at CIBC World Markets in Toronto.
"We saw gold lift right after the Fed's statement last
week. So with the confidence numbers, all of these reports are
just reinforcing in people's minds the probability that Fed may
be doing quantitative easing at some point," said Buchanan.
The Conference Board said a deteriorating labor market and
business conditions drove its September index of consumer
attitudes to its lowest level since February. []
The dollar hit fresh five-month lows versus the euro after
the confidence data, making dollar-priced gold cheaper for
European investors. []
Hedge fund advisor Medley Global Advisors said in a report
that the Federal Reserve is likely preparing a fresh round of
quantitative easing measures to announce at the end of its Nov.
2-3 meeting. []
The Wall Street Journal also reported that the Fed is
weighing a more open-ended, smaller-scale bond buying program,
also to add liquidity into the monetary system.
Similarly, Bank of England policymaker Adam Posen said the
British central bank should start pumping more money into its
economy. [].
"Some people look at the potential inflationary effect of
quantitative easing, but I think a more serious issue is what
it means for the dollar's value down the road," he added.
As the euro gained on the dollar, automatic buy orders were
triggered by gold investors. Many short-term players had set up
for a corrective sell-off in gold when it failed to add to
gains on Monday and early Tuesday, and began taking profits.
POISED TO BENEFIT
Bullion continues to rise in a well-defined channel with
resistance at $1,318 per ounce. (Graphic:
http://link.reuters.com/kez75p)
The average forecast of delegates polled at the end of
London Bullion Market Association annual conference said gold
prices are likely to stand at $1,450 an ounce in a year's time.
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Take a Look on LBMA conference in Berlin:
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Silver <XAG=> shot to $21.76, its highest in three decades,
versus $21.38 late in Monday business.
The London Metal Exchange and LCH.Clearnet said on Tuesday
they aim to introduce a clearing service for over-the-counter
trading in silver next year. []
Platinum <XPT=> was at $1,634 versus $1,627.35, and
palladium <XPD=> rose to $561 versus $548.68 previously.
Prices at 2:44 p.m. EDT (1844 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1308.30 9.70 0.7% 19.3%
US silver <SIZ0> 21.688 0.233 0.0% 28.8%
US platinum <PLV0> 1635.70 5.60 0.3% 11.2%
US palladium <PAZ0> 560.30 9.60 1.7% 37.0%
Gold <XAU=> 1307.15 11.05 0.9% 19.2%
Silver <XAG=> 21.68 0.30 1.4% 28.7%
Platinum <XPT=> 1630.00 2.65 0.2% 11.2%
Palladium <XPD=> 560.00 11.32 2.1% 38.1%
Gold Fix <XAUFIX=> 1294.00 5.00 0.4% 17.2%
Silver Fix <XAGFIX=> 21.17 -37.50 -1.7% 24.6%
Platinum Fix <XPTFIX=> 1614.00 2.00 0.1% 10.1%
Palladium Fix <XPDFIX=> 552.00 9.00 1.7% 37.3%
(Reporting by Carole Vaporeanin New York, Maytaal Angel in
London; Editing by Marguerita Choy)
