* Gold hits record highs above $1,270/oz
* Dollar under pressure as Treasury yields fall
* Silver, PGMS bounce
(Updates with platinum/palladium ratio; refreshes prices)
By Amanda Cooper
LONDON, Sept 14 (Reuters) - Gold hit record highs above
$1,270 an ounce on Tuesday in its biggest one-day rally in four
months, as the U.S. dollar declined broadly after upbeat data
failed to convince investors to shift into risk-linked assets.
Gold is now on course for a 15 percent gain in 2010, fuelled
largely by investor nervousness that stemmed from the fallout
from the euro zone debt crisis and from economic data that has
suggested global economic growth may be losing momentum.
Spot gold <XAU=> was at $1,269.65 an ounce by 1515 GMT, up
from $1,245.25 the day before, having hit a record high of
$1,271.20 earlier in the session. U.S. gold futures for December
delivery <GCZ0> were last up $24.3 an ounce at $1,271.20.
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Graphic on gold's rise to record high:
http://graphics.thomsonreuters.com/gfx1/AC_20101409160405.jpg
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"It's continuing the trends that we've seen through this
year really. Equity markets just remain very, very lacking in
confidence, no one is prepared to put positions on and stick
with them for any length of time," said Credit Suisse precious
metals strategist Tom Kendall.
"There is a lot of volatility and reaction to data ...
people are looking for that defensive asset."
Gold has long served investors as an alternative to volatile
currencies, equities or sovereign bonds that investors will
swiftly punish.
ROOM TO MANOEUVRE
This year has seen an expansion in open interest in U.S.
gold futures and hefty flows into exchange-traded products
backed by physical bullion and even if the economic data
improves, some analysts believe gold has room to rally.
"The funds are certainly doing some buying ... who else is
it going to be? It's not producers buying it back, it's
investors. And investors, whether rightly or wrongly, believe in
this and that is the message," said ANZ head of sales Peter
Hillyard.
"It's going up for all the same reasons. People are fearful
still. Little things come into the market, little factors that
awaken people's interest in gold," he said.
The euro rose against the dollar after breaking through a
key area of resistance, while U.S. Treasury prices rallied,
brushing off a report that showed sturdy consumer spending in
August, but was not enough to shift investors' expectations for
a slowdown and lower bond yields. [] []
Gold is on track for a near-16 percent rise this year,
fuelled primarily by investors seeking an alternative to
volatile currencies, equities and some sovereign bonds as
economic data has cast doubt on the global growth outlook.
"All four precious metals are really keeping a very close
eye on the U.S. dollar right now and if the dollar doesn't
'shape up' as such, this safe-haven buying will continue in the
precious metals," said Afshin Nabavi, head of trading at MKS
Finance.
Although the gold price has held within a few dollars of
record highs for a few weeks, the market is now in the full
throes of the buying season in some of the world's biggest
consumers, who seem undeterred by the price strength.
Across the rest of the precious metals complex, silver
traded at its highest in 2-1/2 years, helped by robust Chinese
industrial output and firm base metals, although the safe-haven
effect boosting gold was also a driving force. []
Spot silver <XAG=> was last at $20.42 an ounce, up from
$20.02 the day before and on course for its third consecutive
day of gains.
In the platinum group metals, platinum <XPT=> leapt to its
highest level since early August, just below $1,590 an ounce, to
be last quoted at $1,587.00, against $1,543.65 on Monday.
This pushed the platinum/palladium ratio -- the number of
ounces of palladium needed to buy one ounce of platinum -- to
around 2.88, its lowest level since April 2004.
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For a graphic of the platinum/palladium ratio, click here:
http://graphics.thomsonreuters.com/gfx1/AC_20101409161406.jpg
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Palladium <XPD=> hit its highest in four months, trading
above $550 an ounce.
Palladium, which is predominantly used in the production of
auto catalysts, is on track for a 33 percent increase this year
and is one of the top performers of the commodities complex.
Palladium was last at $550.00 up from $524.95 on Monday, set
for its biggest daily rally since late May.
(Editing by Sue Thomas and Alison Birrane)
