(Recasts with quotes, prices, changes dateline, pvs SINGAPORE)
By Atul Prakash
LONDON, Jan 15 (Reuters) - Gold prices rose towards historic
highs on Tuesday as the dollar stayed weak on expectations of a
half-percentage-point cut in U.S. interest rates.
The market looked ahead to a slew of U.S. bank results,
which could intensify financial market uncertainty and influence
the dollar. Any signs of further weakness in the U.S. currency
might attract more investors into the precious metals market.
Other key metals also advanced, with platinum near record
highs and silver keeping within sight of a 27-year peak hit on
Monday. Palladium eased but was near a two-month high.
"Markets don't go in a straight line so I wouldn't be
surprised to see some pullback, but medium term I am still very
friendly to the gold market," said Jeremy East, head of metals
trading at Standard Chartered Bank.
"There is now a lot of expectation in the market of a
dramatic interest rate cut. The other supporting factor that we
have seen continuing is bad news for the banks. We are going to
see a number of results coming out from financial institutions
and the market would be watching them very carefully."
Spot gold <XAU=> rose as high as $910.70 an ounce and was at
$904.75/905.45 by 1103 GMT. Bullion closed at $902.10/902.80 in
New York late on Monday, when it hit an alltime high of $914 on
investor buying, driven by the dollar's slide.
U.S. gold futures hovered near record highs. The most active
February contract <GCG8> gained $2.6 an ounce to $906.10.
Gold's appeal as an alternative investment is increasing as
the dollar comes under pressure on concerns that some of the
largest U.S. banks will report weaker earnings this week.
The dollar was steady against the euro, but was not far from
a record low hit last year, with the market expecting that U.S.
retail sales data and banking results could boost the case for
aggressive, growth-boosting interest rate cuts.
Citigroup Inc <C.N> is the first big bank this week to
report fourth-quarter earnings and the spotlight will be on how
much the credit crisis is damaging banks' bottom lines and
increasing the risk of a recession.
"We continue to see decent buying even at these record high
prices. But the market remains nervous with no one willing to
enter into short positions or willing to call the turning point
-- something that supports prices at least for now," Standard
Bank said in a report.
RECORD HIGH ETF
Investors continued to park their money in exchange-traded
funds, backed by physical metals.
Gold held in New York-listed StreetTRACKS Gold Shares
<GLD.N> <XAUEXT-NYS-TT>, the world's largest gold-backed ETF,
rose to a record high of 652.56 tonnes on Monday.
London-based ETF Securities said in a statement its precious
metal ETFs had accumulated over $1.1 billion since April 2007.
In the past 6 weeks, they added $260 million, shared equally
amongst platinum, silver, gold and a precious metals basket.
In the physical sector, consumers in India, turned their
backs on jewellery shops as gold hit record high, but others
showed more resilience with dealers noting demand out of China
and other parts of Asia. []
India is the world's largest consumer of gold.
Platinum <XPT=> rose to $1,577/1,582 from $1,572/1,577 an
ounce in New York on Monday, when it spiked to a record high of
$1,590.50, tracking gold's rally.
"The outlook for the white metal is still extremely bullish,
with the tight fundamental picture limiting price dips and the
white metal should now look to challenge $1600/oz," James Moore,
precious metals analyst at TheBullionDesk.com said in a note.
Silver <XAG=> rose to $16.36/16.41 from $16.31/16.36 an
ounce, but off Monday's 27-year high of $16.58. Palladium <XPD=>
fell to $377/382 an ounce from $379/384.
(Additional reporting by Lewa Pardomuan in Singapore and
Biman Mukherji in New Delhi)
(Reporting by Atul Prakash; editing by Chris Johnson)
