* Gold rises after Geithner's comments as dollar falls
* U.S. stocks turn negative as economic enthusiasm fades
* SPDR holdings jump to record 1,124.99 tonnes
(Recasts, updates with quotes, market activity, adds NEW YORK to
dateline)
By Frank Tang and Paul Lauener
NEW YORK/LONDON, March 25 (Reuters) - Gold prices rose sharply
on Wednesday as the dollar weakened after U.S. Treasury Secretary
Timothy Geithner talked about a system put forward by China that
would replace the dollar as the world's reserve currency.
Geithner said he was "quite open" to China's suggestion of
moving towards a currency system linked to the International
Monetary Fund's Special Drawing Rights (SDRs), a basket of dollars,
euros, sterling and yen, as a super-sovereign reserve currency.
That hit dollar sentiment as it could mean countries selling
large portions of their dollar reserves, highlighting the use of
gold as a hedge against the U.S. currency, analysts said.
Spot gold <XAU=> was at $937.10 an ounce at 2:10 p.m. EDT (1810
GMT), up 1.3 percent from its last quote in New York late Tuesday.
U.S. gold futures for April delivery <GCJ9> settled up $12.00,
or 1.3 percent, at $935.80 an ounce on the COMEX division of the New
York Mercantile Exchange.
"The dollar came off after Geithner's comments," said Eugen
Weinberg, analyst at Commerzbank. "Gold gained on the dollar."
A weaker U.S. currency makes metals priced in dollars cheaper
for holders of other currencies. []
However, gold pared gains when Geithner later said the dollar
would remain the world's reserve currency for a long time.
[]
Gold's use as a hedge against financial uncertainty has come
under pressure in recent days as stock markets rallied on optimism
about the U.S. government's drive to clean up bad loans held by
banks.
U.S. stocks, however, turned negative later in the session as
enthusiasm from upbeat economic data faded, supporting the price of
the metal.
Bullion is up about 5 percent from a six-week low of $882.90 hit
on March 18, but is still more than 7 percent shy of the 11-month
high above $1,000 set in February. It soared to an all-time peak of
$1,030.80 in March 2008.
Investors piled into gold in recent months as the financial
crisis escalated, the dollar tumbled and markets started to worry
about price pressures in the pipeline because of the vast amounts of
money being pumped into economies.
"In addition to the factors that have always been driving gold
prices higher, the Fed's decision last week is simply another
impetus," said Dennis Gartman, independent investor and author of
the daily Gartman Letter.
Last Wednesday, the Federal Reserve said it would buy up to $300
billion worth of long-dated U.S. government debt to help ease credit
market conditions.
Strong interest can be seen in the world's largest gold-backed
exchange-traded fund, the SPDR Gold Trust <GLD>, which said its
holdings rose to a record 1,124.99 tonnes on March 24, up 10.7
tonnes from the day before.[]
For details on the gold holdings of the ETF listed in New York
and co-listed on other exchanges, click:
http://www.exchangetradedgold.com/iframes/usa.php
For a graphic, click:
https://customers.reuters.com/d/graphics/MKTS_SPDRGLD240309.jpg
In other metals, spot silver <XAG=> was at $13.47 an ounce, up
0.5 percent from its Tuesday finish of $13.40 an ounce, palladium
<XPD=> was at $208.50 an ounce, up 1.5 percent from its late Tuesday
New York quote of $205.50 and platinum <XPT=> was at $1,117.50 an
ounce, up 0.3 percent from its previous close of $1,114.
Platinum used in autocatalysts to clean car emissions has
tumbled alongside deteriorating sales in the auto sector. Prices
have halved since a record $2,290 in March 2008.
(Additional reporting by Pratima Desai; Editing by Marguerita
Choy)
