* Gold rallies above $1,470/oz, silver breaks above $40/oz
* Inflation worries prompts fund to buy precious, commods
* US gov't shutdown worry, rate differentials hit dollar
* Coming up: Friday midnight deadline looms for US gov't
(Recasts, updates prices, market activity, adds link to
graphic)
By Frank Tang
NEW YORK, April 8 (Reuters) - Gold rose to a record high
for a fourth straight day and silver surged on Friday, as a
weaker dollar, the prospect of a U.S. government shutdown and
inflation worries lifted precious metals in a broad commodities
rally.
Gold was set for its biggest weekly gain in four months,
drawing support from renewed euro zone sovereign debt fears
amid Portugal's financial crisis and inflation jitters as crude
oil and corn hit new highs this week.
Bullion broke above key resistance on technical charts and
could target above $1,500 an ounce. The metal has risen more
than 10 percent since late January when political unrest began
to flare in the Middle East and North Africa.
"With the expected future inflation being higher in this
low interest rate environment, investors are more inclined to
have some contributions to commodities as an inflation hedge,"
said Hakan Kaya, commodities portfolio manager at Neuberger
Berman, which manages about $190 billion client assets.
Spot gold <XAU=> rose as high as $1,474.19 an ounce and was
later up 1 percent at $1,472.20 an ounce by 12:36 a.m. EDT
(1636 GMT). Bullion was on track to rise 2.5 percent this week
for a fourth straight weekly gain. U.S. gold futures for June
delivery <GCM1> gained 1 percent to $1,473.60.
Gold remained far below its all-time inflation-adjusted
high, estimated at almost $2,500 an ounce set in 1980 as a
result of heightened geopolitical pressure and hyperinflation.
(Graphic: http://r.reuters.com/ren88r )
U.S. futures activity was sharply below average for a
second consecutive day, but analysts said low volume is not
detrimental to the bull run after a strong price rally.
Silver <XAG=> rose 2.3 percent to $40.42 an ounce, just off
the session high of $40.49.
The gold-to-silver ratio -- the number of silver ounces
needed to buy an ounce of gold -- fell to a 28-year low near 36
on Friday. (Graphic: http://r.reuters.com/myt88r)
"One would expect silver to outperform in this environment
because it bears a higher risk than gold on a volatility
basis," Kaya said.
DOLLAR WEAKNESS UNDERPINS
The dollar slide against the euro, supported by widening
interest rate differentials after ECB's rate hike, and crude
oil's surge to 2-1/2 year high added fuel to a rally that has
already taken gold to a series of record highs this year.
Gold also benefits from dollar weakness as Democratic and
Republican congressional leaders said on Friday there was no
overall deal on government funding for the rest of the fiscal
year that ends Sept. 30, and could not even agree on what
disagreements remain ahead of the midnight Friday deadline.
[]
The looming U.S. government shutdown was "simply a minor
problem of far greater problems," said Camilla Sutton, chief
currency strategist at Scotia Capital. The issues with the U.S.
dollar are not temporary and the dollar is expected to remain
weak this year, she added.
On charts, gold breached important technical resistance at
$1,466 an ounce near Thursday's high, said Rick Bensignor,
chief market analyst at Dahlman Rose.
If bullion could hold above $1,466 early next week, it
should next target an area between $1,500 and $1,510 an ounce,
Bensignor said.
Among other precious metals, platinum <XPT=> gained 1.3
percent to $1,803.74 an ounce, while palladium <XPD=> jumped
2.2 percent to $791.97.
Prices at 12:36 p.m. EDT (1636 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCM1> 1473.60 14.30 1.0% 3.7%
US silver <SIK1> 40.490 0.938 2.4% 30.9%
US platinum <PLN1> 1810.50 19.90 1.1% 1.8%
US palladium <PAM1> 795.00 14.75 1.9% -1.0%
Gold <XAU=> 1472.20 14.75 1.0% 3.7%
Silver <XAG=> 40.42 0.91 2.3% 31.0%
Platinum <XPT=> 1803.74 22.64 1.3% 2.1%
Palladium <XPD=> 791.97 16.94 2.2% -0.9%
Gold Fix <XAUFIX=> 1469.50 -1.00 -0.1% 4.2%
Silver Fix <XAGFIX=> 40.22 71.00 1.8% 31.3%
Platinum Fix <XPTFIX=> 1803.00 7.00 0.4% 4.2%
Palladium Fix <XPDFIX=> 798.00 9.00 1.1% 0.9%
(Addtional reporting by Julie Haviv in New York, Jan Harvey in
London; Editing by David Gregorio)
