* Gold hits record above $1,360/oz
* Vietnam says will grant import licenses and quotas
* Coming up: U.S. initial jobless claims; 1230 GMT
(Updates prices, details)
By Amanda Cooper
LONDON, Oct 7 (Reuters) - Gold rose to a third successive
record high on Thursday, putting it on track for its strongest
weekly performance in six months, as expectations for the
Federal Reserve to prop up the economy undermined the dollar.
The Fed was widely expected to resume quantitative easing --
in which the central bank would buy government bonds for example
and pump extra cash into the financial system to keep interest
rates low -- which has pushed the dollar down 7 percent against
a basket of currencies in the last month.
Gold, which usually benefits from dollar weakness due to its
inverse relation with the U.S. currency, has gained nearly 10
percent in the same period.
Spot gold <XAU=> was last at $1,360.25 an ounce at 1127 GMT,
up from $1,345.80 late on Wednesday, but down from an all-time
peak of $1,364.60 struck earlier in the day.
The price has risen by 3.2 percent so far this week, its
largest weekly rise since mid-April.
U.S. gold futures for December delivery <GCZ0> hit a fresh
record high at $1,366 an ounce, before easing slightly to show a
1 percent gain on the day at $1,361.60.
"We look at the reasons for holding gold and other precious
metals and, above everything else, it is the idea of a store of
value to protect against currency debasement," said Natixis
strategist Nic Brown. "Whether you're undergoing quantitative
easing or whether you're devaluing your currency against others,
it all adds up to pretty much the same thing."
"As a consequence, governments are delaying any fiscal
austerity, while monetary authorities are rolling out additional
quantitative easing measures over and above the exceptionally
low interest rates that are already in place, that is just good
for gold."
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For a graphic of gold priced in different currencies:
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SUPPORT FROM FUNDAMENTALS
Gold retreated from earlier highs after the world's
third-largest producer of the metal, Anglogold Ashanti <ANGJ.J>
said it had completed the buy-back of its hedgebook, previously
the largest in the industry. []
But on a supportive note for gold, state media in Vietnam
reported that Asia's second largest bullion consumer after India
would grant licenses and quotas to import gold, which was banned
in mid-2008 as policymakers attempted to tackle the country's
trade deficit. []
"People are going to focus on the fact that the Asian
physical market will be tight. Last time Vietnam opened the door
to gold imports, gold went up $20. In percentage terms, it could
translate into $30 today," said a Singapore-based trader.
In more fundamental news for gold, the World Gold Council
said it expected central banks to be net buyers of gold in 2011,
for the first time in nearly two decades. []
Nervousness over the outlook for U.S. growth was heightened
on Wednesday after a survey of private-sector employment showed
a surprise contraction in September, which further unsettled
investors ahead of Friday's key employment report.
"With expectations for quantitative easing high, data
monitoring between now and the Nov. 3 (Fed policy setting)
meeting becomes even more significant," wrote UBS analyst Edel
Tully in a note.
"The short-term direction of the U.S. dollar, and therefore
gold, will be influenced by tomorrow's U.S. payrolls data: a
positive or negative deviation from expectations will weigh
heavily on market thinking about quantitative easing prospects."
Short-term U.S. Treasury yields are around record lows,
while European equities <> dipped ahead of interest rate
decisions from both the European Central Bank and the Bank of
England later in the day. [] []
The strength in gold extended to the other precious metals.
Spot silver <XAG=> hit a new 30-year high at $23.51 an
ounce, and was last quoted at $23.44, up from $23.13.
Holdings in the iShares Silver Trust <SLV>, the world's
largest silver-backed, exchange-traded fund, rose to a fresh
record high of 9,944.14 tonnes.
Platinum group metals followed the rally in gold. Spot
platinum <XPT=> rose to $1,723, its highest since mid-May and
was last up 1.6 percent on the day at $1,722.50, while palladium
<XPD=> hit a new nine-year peak at $602.50 and was last up
nearly 4 percent at $601.00.
(Additional reporting by Rujun Shen in Singapore)
