* Dollar slides to 2010 low versus currency basket
* SPDR gold ETF reports further decline in holdings
* Silver hits 30-year peak, palladium highest since 2001
(Repeats to fix transmission error)
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Oct 14 (Reuters) - Gold rallied to fresh record
highs in Europe on Thursday as the dollar slid to its lowest
this year versus a basket of major currencies, boosting interest
in the metal as a haven from currency market volatility.
Spot gold <XAU=> hit a high of $1,387.10 an ounce and was
bid at $1,382.75 an ounce at 0930 GMT, against $1,370.90 late on
Wednesday. U.S. gold futures for December delivery <GCZ0> were
up $13.90 at $1,384.40, having peaked at $1,388.10 an ounce.
Gold prices have risen more than 25 percent this year as the
dollar has been battered by expectations that U.S. policymakers
will pursue an increasingly loose monetary policy involving
quantitative easing to stimulate economic growth.
"If there is further dollar weakness surrounding
quantitative easing and the like, it is almost certainly going
to be highly supportive for gold," said RBS Global Banking &
Markets analyst Daniel Major.
"We are very close to the $1,400 level, so if we get some
more dollar weakness, I would not be surprised to see that in
the near future," he added.
Silver prices <XAG=> also rode higher on gold's coat-tails,
reaching a fresh 30-year high at $24.90 an ounce before easing
back to $24.58 an ounce against $23.89.
The dollar index -- which measures the dollar's performance
against a basket of six major currencies -- hit the year's low
on Thursday after Singapore widened its currency's trading band,
piling more pressure on to the struggling greenback. []
Investors are continuing to dump the U.S. currency on
expectations the Federal Reserve will start further
money-printing next month, and as tensions rise over the
increasing volatility of the foreign exchange markets.
"Although QE expectations are an important element of the
rally, currency disputes are also a prime driver of gold
prices," said HSBC's Jim Steel in a note. "The recent IMF
meeting saw the public airing of sharp disagreements between
China and the United States on currency policy."
"The EU has seconded U.S. calls for China to liberalize its
exchange rate polices," he added. "Additionally, emerging market
nations including Brazil, India, and Thailand have imposed taxes
on capital inflows or sought to limit inflows, in an effort to
stem currency appreciation."
While these tensions persist, gold is likely to be well
supported, he said.
SPDR GOLD ETF SEES OUTFLOW
Swiss bank UBS raised its one-month forecast for gold to
$1,425 an ounce from $1,300, saying it sees limited downside
potential for gold ahead of the Fed's November meeting, and its
three-month price view to $1,400 an ounce from $1,300.
"Gold's climb is not showing any signs of slowing," it said.
"$1,400 is now being eyed as a short-term target, which seems
easily achievable as long as the dollar continues to fall across
the board."
Gold's rally towards $1,400 an ounce has outpaced most
expectations. A poll conducted at the London Bullion Market
Association's annual conference in September gave an average
forecast for gold to be trading at $1,450 by Sept. 2011.
[]
A poll of 55 analysts conducted by Reuters in July returned
an average price forecast of $1,197 an ounce for 2010.
Interest in gold-backed exchange-traded funds remained soft,
however, with holdings of the world's largest, New York's SPDR
Gold Trust <GLD>, declining further on Wednesday. They have
fallen some 19.5 tonnes since the end of September. []
Among other precious metals, palladium rallied to a fresh
9-year high at $603 an ounce, lifted by strength in gold, dollar
weakness and an improving supply and demand picture.
Palladium <XPD=> was at $601 against $590.45, while platinum
<XPT=> was at $1,713.55 an ounce against $1,702.25.
(Reporting by Jan Harvey; editing by Keiron Henderson)
