* Gold hits record highs above $1,270/oz
* Silver, PGMs rally on gold's coattails
* Gold could rise above $1,300 by year-end -- GFMS
(Recasts, updates with quotes, market activity, adds second
byline/dateline)
By Frank Tang and Amanda Cooper
NEW YORK/LONDON, Sept 14 (Reuters) - Gold surged more than
2 percent to a record above $1,270 an ounce on Tuesday, its
biggest one-day gain in four months, as investors sought
shelter from economic uncertainty and fled the U.S. dollar.
In a mixed day for commodity and financial markets, the
dollar fell across the board on a range of factors including a
Japanese political vote that dimmed the risk of yen
intervention and the breach of a key technical level.
Gold also gained on concerns that more stimulus may be
needed to get a shaky global economy firmly back on track, one
of the factors that have underpinned the metal's 16 percent
increase this year as major investors stock up on bullion.
"There is a lot of volatility and reaction to data ...
people are looking for that defensive asset," Credit Suisse
precious metals strategist Tom Kendall said.
"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," Kendall said.
Spot gold <XAU=> was at $1,272.40 an ounce by 12:08 p.m.
EDT (1608 GMT), up from $1,245.25 the day before and having hit
a record high of $1,274.75. U.S. gold futures for December
delivery <GCZ0> were up $26.60, or 2.1 percent, at $1,273.70.
(Graphic: http://link.reuters.com/hyp53p )
COMEX gold floor trader Jonathan Jossen said buying related
to bullish option-spread strategies had lifted gold futures.
The gold price also tends to rally in September ahead of
the Indian wedding season and Hindu religious festivals which
are major gold-buying events, Jossen said.
Although gold has held near record highs for a few weeks,
the market is now in the full throes of the buying season in
the world's biggest consumer, India, which seems undeterred by
the price strength.
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. Even if economic data improves,
some analysts believe gold has room to rally further.
"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.
DOLLAR WEAKENS
The euro rose against the dollar after breaking a key area
of resistance, while U.S. Treasury prices rallied as
a report showing sturdy consumer spending in August failed to
shift investors' expectations for a slowdown. [] []
"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.
Gold could rally above $1,300 an ounce this year, setting
successive all-time highs, as uncertainty about economic
recovery and a sovereign debt crisis stoke investment interest,
metals consultancy GFMS Ltd said in a closely watched report.
[]
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, though the safe-haven
effect boosting gold was also a driving force.
Spot silver <XAG=> last fetched $20.41 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 since early August, just below $1,590 an ounce, to be
last quoted at $1,588.00 against $1,543.65 on Monday.
Palladium <XPD=> hit its highest in four months, trading
above $550 an ounce.
Palladium was last at $550.50, up from $524.95 on Monday,
set for its biggest daily rally since late May.
Prices at 12:20 p.m. EDT (1620 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCZ0> 1273.50 26.40 2.1% 16.2%
US silver <SIZ0> 20.475 0.324 1.6% 21.5%
US platinum <PLV0> 1591.80 41.90 2.7% 8.2%
US palladium <PAZ0> 552.50 22.70 4.3% 35.1%
Gold <XAU=> 1271.50 26.25 2.1% 16.0%
Silver <XAG=> 20.45 0.43 2.1% 21.4%
Platinum <XPT=> 1589.00 45.35 2.9% 8.4%
Palladium <XPD=> 551.50 26.55 5.1% 36.0%
Gold Fix <XAUFIX=> 1265.50 12.25 1.0% 14.6%
Silver Fix <XAGFIX=> 20.31 38.00 1.9% 19.5%
Platinum Fix <XPTFIX=> 1569.00 1.00 0.1% 7.0%
Palladium Fix <XPDFIX=> 544.00 1.00 0.2% 35.3%
(Reporting by Frank Tang; Editing by Dale Hudson)
