* Investors buy on breaks, igniting late-session rally
* Strong sentiment could boost prices early next week
(Recasts, updates comments, closing prices, market activity,
changes dateline from LONDON)
By Frank Tang
NEW YORK, Nov 20 (Reuters) - Gold rallied late on Friday in
the face of a stronger dollar and ended higher for a third
straight week on investor sentiment amid inflation concerns and
economic uncertainty.
The metal has seen strong support from renewed central bank
interest, buying by prominent hedge fund managers including
John Paulson, and signs of simmering inflation.
"People want to buy gold on breaks. Gold will hold its
stability relative to other asset classes as long as there are
economic uncertainty and potential for inflation going
forward," said Adam Klopfenstein, senior market strategist at
Lind-Waldock.
U.S. COMEX December gold <GCZ9> settled up $4.90 at
$1,146.80 an ounce on the NYMEX. December has now ended higher
for a sixth straight session.
Spot gold <XAU=> was at $1,150.10 an ounce at 3:38 p.m. EST
(2038 GMT), against $1,143.50 late in New York on Thursday.
India's acquisition of 200 tonnes of bullion from the IMF
boosted interest in gold earlier this month. The impetus from
the move pushed gold through key technical resistance levels,
taking gold to a record $1,152.75 an ounce on Wednesday.
The metal may be due a correction after this month's sharp
price rise, analysts said, but in the longer term it is likely
to resume its climb.
"The perception is very positive now because of central
banks buying gold, but they are buying it off the market. It
doesn't change global holdings of the central banks," said
Wolfgang Wrzesniok-Rossbach, head of sales at Heraeus.
"It gives some support, but I think gold has moved too much
in too short a period of time."
Earlier in the session, gold was being capped by strength
in the dollar and weaker equities.
Traders said the fact that gold was able to climb despite
the headwinds of a stronger dollar, weaker equities and lower
oil prices showed strong underlying demand.
Strength in the U.S. unit weighs on gold, as it cuts its
appeal as an alternative asset and makes dollar-priced
commodities more expensive for holders of other currencies.
INFLATION HEDGE
Analysts said gold was likely to take support from interest
in the metal as a hedge against inflation, which some fear will
hit the markets longer term as a result of money flooding into
economies via quantitative easing.
Andrew Cole, manager of the Baring Multi Asset Fund, told
Reuters on Thursday that gold could hit new highs this year and
next as investors look for an inflation hedge. []
Frank McGhee, head precious metals trader of Integrated
Brokerage Services said that a late Friday rally in gold
suggested explosive moves higher could be possible early next
week.
"There is very little you can paint a picture for a
downside in gold at these levels," 'Lind-Waldock's Klopfenstein
said.
Silver <XAG=> was at $18.49 an ounce against $18.51. Metals
consultancy GFMS said on Thursday the metal may rise above $20
an ounce as surging investment more than offsets a drop in
fabrication demand. []
Platinum <XPT=> was at $1,444.50 an ounce against
$1,441.50, while palladium <XPD=> was at $361 against $366.
For a gold price interactive graphic:
http://graphics.thomsonreuters.com/109/GLD/GLD_TMLN1009.html >
(Additional reporting by Jan Harvey in London)
Close Change Pct 2008 YTD
Chg Close % Chg
US gold <GCZ9> 1146.80 4.9 0.4 884.3 29.7
US silver <SIZ9> 18.440 -0.015 -0.1 11.295 63.3
US platinum <PLF0> 1441.90 -2.00 -0.1 941.50 53.1
US palladium <PAZ9> 364.35 -5.55 -1.5 188.70 93.1
Prices at 4:26 p.m. EST (2126 GMT)
Gold <XAU=> 1149.40 5.90 0.5 878.20 30.9
Silver <XAG=> 18.47 -0.04 -0.2 11.30 63.5
Platinum <XPT=> 1444.00 2.50 0.2 924.50 56.2
Palladium <XPD=> 360.00 -6.000 -1.6 184.50 95.1
Gold Fix <XAUFIX=> 1140.00 -2.50 -0.2 836.50 36.3
Silver Fix <XAGFIX=> 18.18 -2.00 -0.1 14.76 23.2
Platinum Fix <XPTFIX=> 1435.00 5.00 0.3 1529 -6.1
Palladium Fix<XPDFIX=> 360.00 1.00 0.3 365.0 -1.4
