* Gold rises to record above $1,400, silver at 30-yr peak
* Renewed euro debt problems more than offset dollar rise
* Inflation fear, modified gold standard remarks in focus
* Coming up: G-20 meeting starts on Wednesday
(Recasts, updates with quotes, closing market prices)
By Frank Tang
NEW YORK, Nov 8 (Reuters) - Gold powered to an all-time
high above $1,400 an ounce on Monday, extending its
record-breaking rally to a third day, as safe-haven buying
prompted by renewed budget problems in Ireland more than offset
a sharp dollar bounce.
Gold has risen almost 6 percent since just before the
Federal Reserve detailed its plans last Wednesday to buy $600
billion worth of Treasuries to revive the economy, but the
Fed's actions also stoked inflation fears.
Palladium rose 3 percent to break above $700 an ounce for
the first time since April 2001, and silver also gained 3
percent to its third consecutive 30-year high on the back of
speculative buying after gold's midday rally.
On Monday, market anxiety was focused mainly on Ireland.
Although the government is funded until early 2011, a report
questioned its ability to cut spending next year, casting doubt
on future demand for government debt. The cost of protecting
Irish government debt against default rose.
"The bond situation in Ireland was worse than expected, so
investors looked to move money into a safe haven, which is
gold," said Michael Daly, gold specialist at futures broker
PFGBest.
"People have gotten to the point that they have lost
confidence in fiat currencies and they are choosing gold as
their currency of choice," he said
Daly also cited remarks by World Bank President Robert
Zoellick that leading economies should consider readopting a
modified gold standard. Even just a mention of using gold to
guide currency movements provided a "great fuel" to the metal's
price, Daly said. []
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Q+A-Could world markets warm to a gold standard?
[]
Reuters Insider show on Zoellick's comments:
http://link.reuters.com/pyv93q
TIMELINE-Gold's history as a currency standard
[]
Factbox on how to invest in gold []
Factbox on gold milestones to record high []
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
In early trade, gold looked set to drop following sharp
gains at the end of last week, but remained near record highs
even as the dollar rallied against the euro on renewed
sovereign debt worries. []
Spot gold <XAU=> rose 1.1 percent to $1,410.30 an ounce at
2:52 p.m. EST (1952 GMT), after setting a record at $1,409.40.
U.S. December gold futures <GCZ0> settled up $5.50 an ounce
at $1,403.20, with COMEX open interest surging about 2.5
percent to an all-time high 643,404 lots on Friday.
Underlying support helped lift the metal after Zoellick's
comments, although most analysts deemed it unrealistic.
"Gold could potentially play a small role in the overall
framework, but I don't think we are in a position to go back to
a gold standard," said commodities strategist Nic Brown of
Natixis.
"The world economy has moved too far from there and it
would need to be one that was built around a more inclusive
range of currencies," he said.
QEII
Many investors see the $600 billion committed by the Fed's
bond-buyback program last week as bigger than initially
thought, and they have no choice but to buy precious metals as
a hedge against inflation, said Miguel Perez-Santalla, vice
president of sales at Heraeus Precious Metals Management.
"Gold is in uncharted waters, and it is going to keep
reacting to fresh money (from the Fed) coming into the market,"
Perez-Santalla said.
Top officials at the U.S. Federal Reserve on Monday sounded
differing notes on the central bank's bond-buying program, with
one arguing it was an effective way to fight deflation risks
and another warning it might need to be curbed.
[]
Silver <XAG=> hit a fresh 30-year peak at $27.65 an ounce
and traded up 3.7 percent at $27.61 an ounce, and palladium
<XPD=> surged 3.5 percent to $710.72, up for a fourth day in a
row, while platinum <XPT=> edged up 0.3 percent at $1,771 an
ounce.
Prices at 2:50 p.m. EST (1950 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1403.20 5.50 0.4% 28.0%
US silver <SIZ0> 27.432 0.684 0.0% 62.8%
US platinum <PLF1> 1771.10 2.20 0.1% 20.4%
US palladium <PAZ0> 710.90 25.50 3.7% 73.9%
Gold <XAU=> 1408.69 14.19 1.0% 28.5%
Silver <XAG=> 27.57 0.95 3.6% 63.7%
Platinum <XPT=> 1769.50 4.00 0.2% 20.7%
Palladium <XPD=> 706.22 23.69 3.5% 74.2%
Gold Fix <XAUFIX=> 1388.50 -1.50 -0.1% 25.8%
Silver Fix <XAGFIX=> 26.72 58.00 2.2% 57.3%
Platinum Fix <XPTFIX=> 1752.00 2.00 0.1% 19.5%
Palladium Fix <XPDFIX=> 694.00 8.00 1.2% 72.6%
(Additional reporting by Amanda Cooper in London, Lewa
Pardomuan in Singapore and Siddesh Mayanker in Mumbai; Editing
by Lisa Shumaker)
