* Euro zone debt back in focus, G20 uncertainty cited
* Silver futures volume rises toward record high
* Coming up: G20 meeting begins Wednesday
(Recasts, updates prices, market activity, changes
byline/dateline, previously LONDON)
By Frank Tang
NEW YORK, Nov 9 (Reuters) - Gold rose to record highs on
Tuesday for a fourth straight day as investors seeking a safe
haven bought both the precious metal and resurgent dollar on
renewed worries over debt burdens in the euro zone.
Other precious metals also rallied. Silver surged to its
fourth straight 30-year peak, at less than $1 below $30 an
ounce. It was silver's biggest four-day rally since September,
2008, and volume was the heaviest since a record day in 1976.
"The heightened sovereign risk issues are just putting more
and more uncertainty into gold, providing the fuel to lift gold
higher along with the other precious metals," said James Steel,
chief commodity analyst at HSBC.
Gold rose in tandem with the dollar for a second straight
day, as investors poured into both the metal and the U.S.
currency as safe havens. Analysts said gold's unsual positive
link with the greenback was similar to what happened when
sovereign debt fears were heightened earlier this year.
The euro struggled for a third straight session, swinging
from gains to losses as investors worried about Irish and
Portuguese debt and hedged sizable bets against the U.S.
dollar. []
Gold has risen almost 8 percent since just before the
Federal Reserve detailed its plans last Wednesday to buy $600
billion worth of Treasuries to revive the economy, but the
Fed's actions also stoked inflation fears.
Spot gold <XAU=> scaled a record at $1,424.02 an ounce and
rose 1.1 percent to $1,423.79 an ounce at 1:06 p.m. EDT (1806
GMT). U.S. gold futures <GCZ0> also hit a record $1,422.10 an
ounce.
Spot silver <XAG=> traded up 5.5 percent at $29.21 an
ounce. COMEX silver futures volume was at 122,000 lots,
preliminary Reuters data showed, within striking distance to a
record of 127,890 lots set in 1976.
The premium that investors are demanding to hold Irish and
Portuguese government debt shot to record highs on concern
about funding and potential default. This prompted European
investors to seek a safe-haven investment such as gold.
[] []
"European investors are worried about the euro, real rates
are very low and set to stay low for a long time, so the
opportunity cost of investing in gold is tiny," said Citi
analyst David Thurtell. "Lots of good reasons to buy it and not
many to sell it," he added.
Also on the radar is this week's G20 summit. Officials from
Germany, Brazil, China and South Africa are among those
expressing concern that the Fed's policy could weaken the
dollar and drive up commodity prices. []
If the G20 fails to defuse global tensions, it may heighten
investor concerns that policymakers are drifting further apart,
leaving the world economy vulnerable.
"There is a lot of uncertainty ahead of the G20 meeting. If
there are no surprises we may see a correction afterwards,"
said David Wilson, analyst at Societe Generale.
"Gold is using any excuse to go higher."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic on S&P 500 priced in gold:
http://graphics.thomsonreuters.com/F/11/GLD_SPX1110.gif
Greek, Irish bond yield spread http://r.reuters.com/tuk54q
G20 battle lines: http://r.reuters.com/jux34q
Basel III; rule reshaping: http://r.reuters.com/zys68p
Gold price performance: http://link.reuters.com/juz44q
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Gold priced in euros <XAUEUR=R> has rallied by more than 7
percent in the last five sessions, rising to its highest since
late June this year.
INFLATION FEARS
"We have a combination: inflation fears, currency market
uncertainty, fears about the financial strength of some
countries," said Alexander Zumpfe of Heraeus Metals.
Zumpfe said remarks by World Bank President Robert Zoellick
that leading economies should consider readopting a modified
gold standard, had also helped reignite interest in the
precious metal. []
Worries about price pressures grew last week when the Fed
set its bond-buying program. This initially weakened the dollar
and powered commodity prices higher. Gold has gained nearly 30
percent this year so far.
Investor demand, which had slackened recently, picked up,
as reflected by the first inflow into the SPDR Gold Trust
<GLD>, the world's largest gold-backed exchange-traded fund,
since Oct. 13. []
Palladium rose almost 5 percent to $740.50 an ounce, the
loftiest level since April 2001, marking its fifth consecutive
daily rally and putting it on track for a ninth weekly
increase.
Palladium has risen by more than 80 percent so far this
year, fueled by demand from investors who are keen to tap into
the metal's exposure to China, where it is used in the
country's booming, gasoline-powered auto sector in
autocatalysts.
Palladium <XPD=> climbed 5 percent to $740.22, while
platinum <XPT=> rose 1.8 percent to $1,803.99 an ounce.
Prices at 12:50 p.m. EST (1750 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCZ0> 1422.20 19.00 1.4% 29.7%
US silver <SIZ0> 28.960 1.528 5.6% 71.9%
US platinum <PLF1> 1803.50 32.40 1.8% 22.6%
US palladium <PAZ0> 739.25 28.35 4.0% 80.8%
Gold <XAU=> 1421.97 12.76 0.9% 29.7%
Silver <XAG=> 28.94 1.25 4.5% 71.9%
Platinum <XPT=> 1796.99 25.49 1.4% 22.6%
Palladium <XPD=> 737.22 32.00 4.5% 81.8%
Gold Fix <XAUFIX=> 1421.00 4.75 0.3% 28.7%
Silver Fix <XAGFIX=> 28.55 183.00 6.8% 68.0%
Platinum Fix <XPTFIX=> 1786.00 6.00 0.3% 21.8%
Palladium Fix <XPDFIX=> 730.00 9.00 1.2% 81.6%
(Additional reporting by Amanda Cooper and Pratima Desai in
London; Editing by David Gregorio)
