* Quantitative easing seen "not if, but when"
* Silver hits 30-yr high; ratio to gold lowest in 11 months
(Updates prices)
By Amanda Cooper
LONDON, Sept 30 (Reuters) - Gold looked set to rack up its
eighth consecutive quarterly gain on Thursday, driven by
weakness in the U.S. dollar and a growing belief among investors
that policymakers will do more to promote economic growth.
Having hit its 11th record high in 13 trading sessions, gold
was on course for a 5 percent gain for the month and the
likelihood the Federal Reserve will pump more cash into the
financial system to support the economy lifted silver as well.
The dollar index fell to an eight-month low, under pressure
from investors shunning the U.S. currency as expectations
mounted for the Fed to resume its quantitative easing programme
to keep rates low and increase money supply.
Spot gold <XAU=> reached a record high of $1,315.80 an ounce
and was bid at $1,305.20 at 1455 GMT, against $1,308.80 late on
Wednesday. U.S. gold futures for December delivery <GCZ0> also
hit a record $1,317.50 an ounce and were later down $3.90 at
$1,306.70.
Two measures of regional business activity beat expectations
and a drop in weekly jobless claims boosted the dollar, which in
turn weighed on gold. But this was unlikely to change the view
that the world's largest economy is flagging.
"In the United States, you've got a gradual grind on the
economic side, so low GDP growth, the Fed likely to keep rolling
over its balance sheet for a while and not increasing interest
rates," said Bank of America-Merrill Lynch analyst Michael
Widmer.
"In that environment, you have a lot of uncertainty and
people are looking to increase their gold holdings."
Speculation in markets is building for the Fed, the Bank of
England and the Bank of Japan to limit rises in interest rates,
which would prove a positive for gold, which tends to benefit in
an environment of loose monetary policy.
"With quantitative easing, it is probably no longer a
question of if, but when," said Daniel Briesemann, an analyst at
Commerzbank.
"The other thing in the mind of investors is that there
might be a war (of) currency devaluations in some of the main
world currencies like the dollar, yen, and so on," he said.
"That is supportive for gold as well."
A raft of U.S. economic data on Thursday showed claims for
unemployment benefit fell last week, while economic growth was a
touch higher in the second quarter than previously thought.
[]
Strength in gold prices also helped lift silver to its
highest level since 1980, palladium to a 2-1/2 year high and
platinum to its strongest since May.
The dollar is on track for its biggest quarterly drop since
the second quarter of 2002 against a basket of six other
currencies, down 8.4 percent. The euro is up 11.3 percent, also
its best performance since 2002. []
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Graphic on gold's performance relative to other commodities
http://r.reuters.com/was95p
Graphic in gold's performance vs other assets:
http://r.reuters.com/cek95p
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FACTORS
Traditionally, dollar weakness has benefited gold as
strength in the U.S. unit lifts gold's appeal as an alternative
asset and makes dollar-priced commodities cheaper for holders of
other currencies. But support for gold has broadened.
UBS analyst Edel Tully said in a note: "This safe-haven
demand does not have a single cause, but rather is driven by an
interplay between related worries about quantitative easing,
excessive debt, asset diversification, currency debasement
generally and dollar weakness specifically."
Silver <XAG=> hit a fresh 30-year high at $22.07 an ounce,
and was later at $21.83 an ounce against $21.87, yet still on
track for its biggest monthly gain since May 2009.
The metal has climbed on the back of rising gold prices, but
continues to outperform its rival. The gold-silver ratio -- how
many ounces of silver are needed to buy an ounce of gold -- fell
to 59.7 on Thursday, its lowest since last October.
Holdings of the world's largest silver-backed
exchange-traded fund, the iShares Silver Trust <SLV>, rose to a
record 9,786.47 tonnes by Wednesday, the trust said, showing
healthy investment appetite for the metal. []
Platinum <XPT=> hit a four-month high at $1,661.00 an ounce
and was later at $1,657.50 against $1,645.75, while palladium
<XPD=> was at $569.00 against $563.45, having earlier touched
its highest since March 2008 at $572 an ounce.
(Additional reporting by Jan Harvey; Editing by Sue Thomas)
