* Off 18-month highs but still in sight of record peak
* Euro/dollar eyed for gold direction
* SPDR Gold holdings <XAUEXT-NYS-TT> rise 0.7 pct
By Chikako Mogi
TOKYO, Sept 17 (Reuters) - Gold prices steadied on Thursday
and hovered near 18-month highs hit the day before when the
dollar slid, with optimism about the global economy prompting
investors to buy riskier and alternative assets.
Traders said the correlation between the dollar and gold has
deepened as gains in bullion accelerated, with currency dealers
also taking cues from the gold market to bet on the greenback's
weakness.
Traders were closely watching the dollar's move against the
euro to gauge whether gold's rally will be sustainable and how
far prices can rise.
"I expect gold prices to extend gains as long as the broad
dollar weakness continues, but with a particular focus on
euro/dollar moves," said Masato Miyanaga, a senior adviser at
H.S. Futures in Tokyo.
He said he expected the euro/dollar near-term target to be
$1.485 <EUR=>, after which gold may see a correction if the euro
eases from that level.
Spot gold <XAU=> inched up 0.1 percent to $1,017.70 an ounce
as of 0306 GMT, compared with New York's notional close of
$1,016.70. It rose as high as $1,020.50 an ounce on Wednesday,
its highest since March 2008.
U.S. gold futures for December delivery <GCZ9> were barely
changed at $1,019.6 an ounce from $1,020.20 on the COMEX division
of the New York Mercantile Exchange.
The contract reached a high of $1,023.30 on Wednesday, unseen
since July 2008. U.S. gold futures are eyeing the prior record
high on gold's continuation chart of $1,033.90 an ounce.
Buying of gold accelerated when the dollar extended losses
against the euro to its 2009 low, reinforcing the metal's appeal
as an alternative investment.
The low-yielding dollar remained pressured on Thursday after
dropping to a one-year low against the euro of $1.4736 and a near
one-year low against a basket of currencies on Wednesday as
optimism about the global economy eroded the greenback's
safe-haven appeal. []
"The market is waiting for a fresh excuse to push prices
higher, as people remain bullish on gold," said Ronald Leung,
director of Lee Cheong Gold Dealers in Hong Kong. "Gold will
remain strong unless the dollar reverses and rises or unless
central banks say they will tighten credit," he said.
The market rally revived investor appetite.
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said its holdings rose to 1,086.479 tonnes
as of Sept. 16, up 7.628 tonnes or 0.7 percent from the previous
business day. <XAUEXT-NYS-TT>. []
For a graphic on SPDR holdings, click on:
http://graphics.thomsonreuters.com/099/CMD_SPDR170909.gif
Gold's rally helped lift other precious metals. Platinum
<XPT=> was at a one-year high of $1,346.00 on Thursday while
silver <XAG=> hit a fresh 13-month high of $17.46 on Thursday.
Both metals are used in manufacturing.
PRICES
Precious metals prices at 0315 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1017.70 1.00 +0.10 15.63
Spot Silver 17.44 0.09 +0.52 54.06
Spot Platinum 1346.00 1.50 +0.11 44.42
Spot Palladium 296.00 0.00 +0.00 60.43
TOCOM Gold 2991.00 25.00 +0.84 16.25 32515
TOCOM Platinum 3944.00 49.00 +1.26 48.72 9401
TOCOM Silver 511.40 10.40 +2.08 60.16 540
TOCOM Palladium 875.00 8.00 +0.92 59.09 67
Euro/Dollar 1.4728
Dollar/Yen 91.04
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Editing by Chris Gallagher)
