* Gold hits 10th record high in past 12 sessions
* COMEX gold open interest at new all-time high, volume up
* Reverse head-and-shoulder to drive gold to $1,340-CitiFX
* Dennis Gartman bearish on gold
* Coming up: US Real GDP, initial claims on Thursday
(Recasts, adds comment, updates prices, new byline/dateline)
By Frank Tang
NEW YORK, 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.
Spot gold <XAU=> hit $1,313.20, its 10th record high in the
past 12 trading days, and was up 0.2 percent at $1,309.30 at
3:29 p.m. EDT (1929 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 open interest rose to new record at 619,408 lots
on Tuesday, and the exchange estimated final gold volume at
121,300 lots, about 6 percent higher than its 30-day average,
preliminary Reuters data showed.
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
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Frank McGhee, head precious metals trader of Chicago-based
Integrated Brokerage Services, said that the gold has been
rallying on its own momentum and technical drivers, ignoring
outside markets.
"Even though all the bullish components are out there,
gold's rally is all about its internal momentum and
technicals," McGhee said.
He cited a bullish outside reversal day on Tuesday when
prices rallied nearly $30 after falling as low as $1,283 an
ounce.
CitiFX strategists said that gold is now in sight to reach
$1,340 based on the metal's reverse head-and-shoulder chart
pattern and Tuesday's bullish outside reversal day. (Graphic:
http://link.reuters.com/pab26p)
The price of gold has rallied 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.
Hedge fund manager Dennis Gartman warned, however, of an
hyper-extended gold market, advising his clients to avoid
buying and to unload their long positions and not hold 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.
GAINS IN SILVER OUTSTRIP GOLD'S
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 0.6 percent at $21.78.
Gains in silver have been outstripping those of gold.
The ratio of gold to silver dropped to the lowest in 11
months below 60 on Wednesday.
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 1.9 percent at $567.50.
Platinum <XPT=> reached its highest since May at $1,652.50,
and was later up 1 percent at $1,648 an ounce.
(Additional reporting by Amanda Cooper and 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%
