(Updates with quotes, prices, adds NEW YORK to dateline)
By Frank Tang and Atul Prakash
NEW YORK/LONDON, March 5 (Reuters) - Gold set an historic
high near $1,000 an ounce on Wednesday, and silver jumped to a
27-year peak, as a record low dollar and strong oil triggered a
fresh wave of bullion buying.
Spot gold <XAU=> rose as high as $991.80 an ounce, after
slipping to a low of $959.45. It was at $985.70/986.50 at 2:15
p.m. (1915 GMT), against $963.20/964.00 in New York late on
Tuesday, when it fell 2 percent with a drop in oil.
"The dollar's role as a reserve currency is being
marginalized. It's becoming more of a localized currency," and
that was very supportive to dollar-denominated gold, said Greg
Orrell, portfolio manager of the $165 million OCM Gold Fund in
Livermore, California.
The dollar hit a fresh low against the euro and a basket of
currencies on renewed concerns about the health of the U.S.
economy.
"The rally is mainly dollar-driven," said Frederic
Panizzutti, precious metals analyst at MKS Finance.
"We tried several times on the upside, but each time lost
momentum on the back of profit-taking. Taking into
consideration that some profits have already been taken, these
moves are probably driven by fresh positions.
"We might be more lucky this time in reaching the key
psychological level of $1,000," he said.
Rising energy prices increased gold's appeal as a hedge
against inflation. U.S. crude futures <CLc1> settled up $5 at
$104.52 a barrel, after an unexpected drop in crude supplies
and following OPEC's decision to keep output unchanged.
"We have to keep an eye on oil and the euro/dollar. As soon
as the euro moves up above $1.50, the market sees fresh
speculative buying. We have a chance to see the $1,000-an-ounce
level," said Michael Kempinski, senior trader at Commerzbank.
"Gold still looks very good on charts."
The euro <EUR=> was quoted at $1.5264, up from $1.5208 in
New York late on Tuesday.
The active U.S. gold contract for April delivery <GCJ8>
settled up $22.20, or 2.3 percent, at $988.50 an ounce. In
early afternoon sessions, it had hit a record high of $995.20.
OTHER METALS JUMP
Gold's rally also supported silver <XAG=>, which rose as
high as $20.82 an ounce and was at $20.68/20.73, against
$19.71/19.76 late in New York on Tuesday.
Platinum <XPT=> fell as low as $2,150 before rising to
$2,240/2,247 an ounce, against $2,220/2,230 late on Tuesday,
when it hit a record of $2,290 on persistent supply fears after
a power crisis disrupted mining in top producer South Africa.
Ralph D'Esposito, a floor trader in New York, said that
platinum was slammed early because the white metal had run up
so much and more significantly than gold.
A crippling power crisis forced a shutdown of the crucial
mining sector for five days in January and since then mines
have been operating with only 90 percent of their usual power.
Palladium <XPD=> fell to a low of $519 an ounce before
jumping to $552/556, against its previous close of $545/550 in
New York on Tuesday, when it rose to a 6-1/2-year high of
$590.
(Editing by Walter Bagley)
