* Gold hits record high $1,313.20; silver at 30-yr peak
* Dollar down on view of further quantitative easing
* iShares Silver holdings at record high
(Recasts, adds comment, updates prices, adds second
byline/dateline)
By Frank Tang and Amanda Cooper
NEW YORK/LONDON, Sept 29 (Reuters) - Gold extended its
record-breaking rally on Wednesday, rising above $1,310 an
ounce while silver hit a 30-year peak, as the dollar hit a
five-month low against the euro on growing expectations of more
U.S. monetary easing.
Gold's strength also lifted other precious metals, with
palladium hitting its highest level since March 2008 and
platinum a four-month high.
The yellow metal has now hit its 10th record high in the
past 12 trading days, spurring hedge fund manager Dennis
Gartman to warn of an hyper-extended gold market and advise his
clients to avoid buying and to unload their long positions.
Spot gold <XAU=> hit a record $1,313.20 and was up 0.2
percent at $1,309.85 an ounce at 2:07 p.m. EDT (1807 GMT). U.S.
gold futures on the COMEX division of the NYMEX for December
delivery <GCZ0> settled up $2 at $1,310.30 an ounce.
COMEX gold's open interest rose to new record at 619,408
lots on Tuesday. In addition, COMEX estimated final gold
volume at 117,500 lots, about 3 percent higher than its 30-day
average, preliminary Reuters data showed.
The price of gold has rallied by 5 percent in September, on
track for a second month of increases, and while analysts are
expecting to see some sort of pull-back, further gains appear
to be on the cards.
"Essentially, it feels like we need to consolidate a bit.
However, there are a lot of people thinking that, but very few
are willing to short the market," said Credit Suisse analyst
Tom Kendall.
"It's quite possible that if there are any further upsets
in either the currency markets or the rates markets ... we
could get another leg higher and then we'd be looking at the
next upside target at $1,330," he said.
The dollar fell for a fourth straight session to hit a new
five-month low against the euro as broadly weak economic data
reinforced the belief the U.S. Federal Reserve could resume its
purchases of Treasuries to keep interest rates low. []
"Gold is flying because of concerns over a weakening
dollar, and the prospect of quantitative easing," said David
Wilson, an analyst at Societe Generale.
"We are not convinced the European economy is going to be
doing particularly well next year either," he added. "It is
going to be a kind of competition (to show) who will be worse
out of the two."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic on relationship between quantitative easing
expectations, the dollar, and gold:
http://graphics.thomsonreuters.com/F/09/GLD_IRDLR0910.gif
Graphic on gold's price performance adjusted for inflation:
http://r.reuters.com/nym54p
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
CitiFX strategists said that gold is now in sight to reach
$1,340 based on a bullish outside reversal day on Tuesday and a
reverse head-and-shoulder chart pattern.
GARTMAN CAUTIOUS
Independent investor Dennis Gartman said that investors
should avoid holding more than 5 percent of their liquid assets
in the gold market.
"We cannot strongly enough urge everyone to avoid buying
gold here and we shall go so far as to suggest that those who
are long begin the process of quietly heading for the
exits...," he said in his Gartman Letter.
Holdings of the largest silver ETF, the iShares Silver
Trust <SLV>, also rose on Tuesday, climbing 143 tonnes to a
record high of 9,756 tonnes. []
Silver prices <XAG=> responded by marking another 30-year
high at $22.00 an ounce. It was last up 0.3 percent at $21.95.
Gains in silver have been outstripping those of gold.
The ratio of gold to silver dropped below 60 on Wednesday,
the lowest in 11 months.
Palladium <XPD=> was the biggest climber of the precious
metals on Wednesday, rising by as much as 2.5 percent to a
2-1/2 year high at $571 an ounce earlier in the day. It was
last up 1.7 percent at $566.50.
Platinum <XPT=> reached its highest since May at $1,652.50,
and was later up 1.2 percent at $1,650.50 an ounce.
(Additional reporting by Jan Harvey in London; Editing by
Marguerita Choy)
Prices at 2:02 p.m. EDT (1802 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1310.30 2.00 0.2% 19.5%
US silver <SIZ0> 21.688 0.233 0.0% 28.8%
US platinum <PLF1> 1656.60 15.90 1.0% 12.6%
US palladium <PAZ0> 560.30 9.60 1.7% 37.0%
Gold <XAU=> 1309.50 2.10 0.2% 19.4%
Silver <XAG=> 21.94 0.25 1.2% 30.3%
Platinum <XPT=> 1646.00 14.35 0.9% 12.3%
Palladium <XPD=> 566.00 8.85 1.6% 39.6%
Gold Fix <XAUFIX=> 1307.50 0.00 0.0% 18.4%
Silver Fix <XAGFIX=> 21.87 70.50 32.3% 28.7%
Platinum Fix <XPTFIX=> 1647.00 2.00 0.1% 12.3%
Palladium Fix <XPDFIX=> 564.00 2.00 0.4% 40.3%
