* Gold hits record highs above $1,270/oz
* Silver hits 2-1/2-year high, PGMs rally
* Weak German investor morale, QE market talk
* Coming up: U.S. import/export prices on Wednesday
(Recasts, updates prices to market close, adds comments)
By Frank Tang
NEW YORK, 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 a
bastion of stability amid topsy-turvy trade in other markets.
Silver hit a 2-1/2-year high and platinum group metals
leapt as much as 5 percent on gold's rally, underscoring a
schizophrenic day in which equities see-sawed, the dollar sank,
soft commodities jumped and funds fled uncertainty.
Gold rallied early in the U.S. trading day on market talk
about a Goldman Sachs research report that the Federal Reserve
will cut growth forecasts and embark on more quantitative
easing to get a shaky global economy firmly back on track.
That news, coupled with a Japanese political vote that
dimmed the risk of yen intervention and weak German investor
morale data, took the dollar index <.DXY> about 1 percent
lower, helping extend bullion's gains this year to 16 percent
and making it a top-performing asset. [] []
Spot gold <XAU=> was at $1,272.20 an ounce by 3:03 p.m. EDT
(1903 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> settled up $24.60, or 2 percent, at $1,271.70.
(Graphic: http://link.reuters.com/hyp53p )
Axel Merk, portfolio manager of the $500 million Merk
Mutual Funds, said gold's rise was driven by renewed worries
over reflation, with investors seeking a hedge that would
better hold its value as governments strive to boost economic
growth with future bailouts and deficit spending.
Others cited a more general lack of clarity over the
outlook for other markets.
"There are still a lot of doubts lurking in the background.
People are nervous about financial markets and aren't convinced
that they are going to continue to rally, and that type of
uncertainty is working in gold's favor," said Bill O'Neill,
partner at New Jersey-based commodities firm LOGIC Advisors.
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," 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.
GOLD RISES, DOLLAR WEAKENS
The dollar sold off across the board, touching a 15-year
low below 83 yen as a break of technical support in several
pairs sparked a stampede out of the U.S. currency.
U.S. equity markets were mostly mixed, but Treasury prices
rallied as a report showing sturdy consumer spending in August
failed to shift investors' expectations for a slowdown. []
[]
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 also served as a driving force.
Spot silver <XAG=> last fetched $20.45 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, and was last at $1,590.50 against
$1,543.65 on Monday.
Palladium <XPD=> hit its highest in four months and last
fetched $551.50, up from $524.95 on Monday, set for its biggest
daily rally since late May.
Prices at 3:28 p.m. EDT (1928 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1271.70 24.60 2.0% 16.0%
US silver <SIZ0> 20.401 0.291 0.0% 21.1%
US platinum <PLV0> 1594.40 44.50 2.9% 8.4%
US palladium <PAZ0> 551.75 23.95 4.5% 35.0%
Gold <XAU=> 1271.90 26.65 2.1% 16.0%
Silver <XAG=> 20.45 0.43 2.1% 21.4%
Platinum <XPT=> 1588.00 44.35 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%
(Additional reporting by Amanda Cooper in London; Editing by
Dale Hudson)
