* Dollar drops versus euro on strong U.S. economic data
* Gold recently rises in tandem with equities market
* U.S. GDP data grows stronger-than-expected 3.5 pct in Q3
(Recasts, updates comments, closing prices, market activity,
adds NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Oct 29 (Reuters) - Gold rose toward $1,050
an ounce on Thursday, gaining 2 percent after data showing
optimistic U.S. economic growth knocked the dollar and sent
Wall Street into a rally mode.
Other precious metals rose sharply in gold's wake, with
silver climbing more than 3 percent, platinum nearly 2 percent
and palladium nearly 3 percent.
Gold has recently climbed in tandem with rising equities,
driven by economic optimism. Historically, the metal moves in
opposite direction to stocks because of bullion's appeal as a
safe haven in terms of crises.
Frank Holmes, chief executive of U.S. Global Investors,
said that gold was able to perform well in a low interest rate
environment amid currency depreciation and inflation worries.
Spot gold hit a high of $1,047.50 an ounce and was at
$1,045.75 an ounce at 2:21 p.m. EDT (1821 GMT), against
$1,026.85 late in New York on Wednesday.
U.S. December gold futures <GCZ9> settled up $16.60, or 1.6
percent, at $1,047.10 an ounce on the COMEX division of NYMEX.
The U.S. economy grew at a greater-than-expected 3.5
percent in the third quarter, data showed on Thursday,
unofficially ending the worst recession in 70 years.
[]
"The U.S. GDP was better than expected, and that has
encouraged some more risk appetite to come into the complex, as
the U.S. dollar weakens," said Standard Chartered analyst
Daniel Smith.
The news knocked the dollar lower against the euro <EUR=>
and a basket of currencies <.DXY>. The euro has been viewed as
a proxy for risk appetite for much of the year, gaining when
economic data is positive. []
Weakness in the dollar benefits gold, which is often seen
as an alternative asset to the U.S. unit.
"The general trend is still for further dollar weakness,
which will be supportive for the whole commodities complex,"
said Smith.
Gold investors took heart as the U.S. stock market added
gains in afternoon trade, reversing heavy losses from the
previous two sessions. The broad-based S&P 500 index <.SPX>
rose more than 2 percent.
Oil prices rose back towards $80 a barrel after the GDP
figures, making up lost ground after the previous session's 2.6
percent decline. []
Strength in crude prices often helps gold because bullion
is sometimes viewed as a hedge against oil-led inflation.
OUTFLOW IN SPDR GOLD
Some physical gold demand is also returning to the market
after prices slid, dealers said, helping the metal shrug off a
further small outflow from the world's largest gold-backed
exchange-traded fund.
On the investment side, New York's SPDR Gold Trust <GLD>
reported an outflow of a further 1.22 tonnes on Wednesday, the
third such sale this week. []
In official-sector news, Russia now plans to sell 25 tonnes
of gold from the state precious metals and gems repository
Gokhran, possibly on the local market. For details, click
within the brackets. []
Among other precious metals, spot silver <XAG=> was at
$16.59 an ounce against $16.09, tracking gold higher after the
previous session's 3.3 percent decline.
Platinum <XPT=> was at $1,336.50 an ounce against
$1,303.50, while palladium <XPD=> was at $324.50 against
$313.50.
Close Change Pct 2008 YTD
Chg Close % Chg
US gold <GCZ9> 1047.10 16.6 1.6 884.3 18.4
US silver <SIZ9> 16.655 0.415 2.6 11.295 47.5
US platinum <PLF0> 1338.20 31.30 2.4 941.50 42.1
US palladium <PAZ9> 328.30 10.90 3.4 188.70 74.0
Prices at 2:21 p.m. EDT (1821 GMT)
Gold <XAU=> 1045.75 18.90 1.8 878.20 19.1
Silver <XAG=> 16.59 0.50 3.1 11.30 46.8
Platinum <XPT=> 1336.50 33.00 2.5 924.50 44.6
Palladium <XPD=> 324.50 11.000 3.5 184.50 75.9
Gold Fix <XAUFIX=> 1040.50 6.50 0.6 836.50 24.4
Silver Fix <XAGFIX=> 16.33 0.00 0.0 14.76 10.6
Platinum Fix <XPTFIX=> 1328.00 10.00 0.8 1529 -13.1
Palladium Fix<XPDFIX=> 324.00 5.00 1.6 365.0 -11.2
(Editing by Christian Wiessner)
