* Gold rises as G20 sees more QE as early as November
* Possible currency war increases gold's safe-haven appeal
* Palladium hits high on US truck efficiency proposal
* Coming up: U.S. October consumer confidence due Tuesday
(Recasts, updates with comments, closing prices)
By Frank Tang
NEW YORK, Oct 25 (Reuters) - Gold rose 1 percent on Monday,
resuming its rally after its first weekly decline in nearly
three months, as a G20 agreement hardened expectations that the
Federal Reserve will pump more money into the economy.
Silver surged 1.5 percent and palladium hit its highest
price in nearly a decade, as the dollar fell broadly after the
G20 agreed to shun competitive currency devaluations but
stopped short of setting targets to reduce trade imbalances.
[]
"The lackluster ending of the G20 without resolving a lot
of the major currency disputes has allowed the gold to resume
the upside," said James Steel, chief commodity analyst at
HSBC.
Gold has benefited as a safe haven as countries depreciate
their currencies to make their exports cheaper to boost
economic growth, analysts said.
Spot gold <XAU=> rose 1 percent to $1,340.44 an ounce at
2:55 p.m. EDT (1855 GMT). U.S. December gold futures <GCZ0>
settled up $13.80 at $1,338.90, with COMEX futures volume about
10 percent lower than the 30-day average, preliminary Reuters
data showed.
Analysts said the G20 finance ministers on Saturday pointed
to a status quo in currency markets and failed to give
investors any reason to stop selling the dollar on expectations
the Fed will unleash a second round of QE as early as its Nov.
2-3 meeting []
"It's a very bullish picture for gold," said Carl Firman,
analyst at Virtual Metals.
"You have this prospective QE2, dollar weakness, inflation
fears," he added. "After Christmas we're looking at possibly
$1,400."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic on on QE2 impact on gold and dollar:
http://link.reuters.com/kaf27p
Graphic on commodity price performances in 2010:
http://link.reuters.com/baf29p
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Monday's data showed sales of previously owned U.S. homes
rose in September, but remained at subdued levels that did
little to undermine the case for additional monetary stimulus
next week from the Fed to reinvigorate the economy, a process
known as quantitative easing (QE). []
Last week, gold lost about 3.1 percent, roughly matching
its last significant weekly decline in early July.
Since late July, gold had rallied 20 percent to a record
$1,387.10 an ounce on Oct. 14, but has since struggled to
maintain traction as the dollar rebounded amid fears expected
U.S. monetary easing had been too heavily priced into the
market.
The fact that the dollar did not fall further after G20
suggested bullion could weaken in the short term due to a
resurgent U.S. currency, said James Dailey, portfolio manager
of the Team Asset Strategy Fund <TEAMX.O>.
PHYSICAL DEMAND SUPPORTS
Robust physical demand from top gold-consuming country
India ahead of the key Hindu festival of Diwali, a major
gold-buying event, is likely to keep gold prices buoyant.
[]
Platinum group metals were lifted by news that the Obama
administration proposed that heavy trucks reduce carbon
emissions by 20 percent by 2018 as part of a first-ever fuel
efficiency standard for commercial vehicles. []
Platinum and palladium are mainly used as autocatalysts to
clean tailpipe exhaust fumes from vehicles. That accounts for
more than half of worldwide demand for the two platinum-group
metals.
Spot palladium <XPD=> rose 3.8 percent to $609.50, after
hitting a session peak at $617.50, its highest since mid-2001.
Palladium has risen about 50 percent so far this year, nearly
double the rise in gold and three times the pace of platinum's
rise.
Platinum <XPT=> gained 1.6 percent to $1,695.17 an ounce,
while silver <XAG=> traded up 1.5 percent at $23.60 an ounce.
Prices at 2:53 p.m. EDT (1853 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1338.90 13.80 1.0% 22.1%
US silver <SIZ0> 23.544 0.426 0.0% 39.8%
US platinum <PLF1> 1697.00 21.90 1.3% 15.4%
US palladium <PAZ0> 608.80 17.70 3.0% 48.9%
Gold <XAU=> 1340.44 13.74 1.0% 22.3%
Silver <XAG=> 23.60 0.36 1.5% 40.1%
Platinum <XPT=> 1695.17 27.42 1.6% 15.7%
Palladium <XPD=> 609.50 22.52 3.8% 50.3%
Gold Fix <XAUFIX=> 1337.50 -7.50 -0.6% 21.2%
Silver Fix <XAGFIX=> 23.71 66.00 2.9% 39.6%
Platinum Fix <XPTFIX=> 1702.00 6.00 0.4% 16.1%
Palladium Fix <XPDFIX=> 611.00 4.00 0.7% 52.0%
(Additional reporting by Rebekah Curtis in London; Editing by
Lisa Shumaker and Cynthia Osterman)
