* Gold highest since February, silver at one-year high
* Safe-haven demand, inflation fear boost precious metals
* Friday's U.S. August nonfarm payrolls data in focus
(Recasts, updates throughout, changes byline, dateline)
By Frank Tang
NEW YORK, Sept 3 (Reuters) - Gold futures rallied to a
six-month high near $1,000 an ounce on Thursday as renewed
economic uncertainties and inflation fears prompted investors
to pile into precious metals as a safe haven.
Gold's sharp rise over the past two days was driven partly
by pent-up demand, because longer-term inflation expectations
have been rising as central banks keep pumping money into the
financial markets to jolt the economy.
"One of the reasons why gold has held steady until recently
is that there has been an underlying idea we will have
inflation going forward. It doesn't appear imminent, however,
so the market had not really been moving particularly on that,"
said Bill O'Neill, managing partner of New Jersey-based LOGIC
Advisors.
Gold and silver stocks outperformed the physical metals, as
investors bet on the notion that mining companies would rise
further after a lackluster performance due to a sliding stock
market. Arca Gold BUGS index <.HUI> jumped over 6 percent.
Strong investment demand fueled gold's gains. SPDR Gold
Trust <GLD>, the world's largest gold-backed exchange-traded
fund, commonly known as GLD among traders, said its gold
bullion holdings rose 1.53 tonnes to 1,063.36 tonnes as of
Wednesday -- about 50 tonnes below its all-time high.
U.S. December gold futures <GCZ9> settled up $19.20, or 2
percent, at $997.70 an ounce on the COMEX division of the New
York Mercantile Exchange.
The December contract hit a session peak of $999.50, which
marked the highest price since Feb. 24, when the equities
market had tanked on mounting recession fears.
Spot gold <XAU=> was at $992.15 an ounce at 4:01 p.m. EDT
(2001 GMT), against $976.60 an ounce late in New York on
Wednesday.
Gold had been rising along with the stock market, but that
positive correlation was broken this week when gold rose even
as Wall Street tumbled.
"Gold was driven by portfolio diversification out of
equities and back into gold as a safe haven as investors are
once again reminded of those economic concerns," said David
Meger, director of metals trading with Vision Financial Markets
in Chicago.
The market was waiting for clues on the economic outlook
from Friday's payrolls numbers. Investors were spooked after a
U.S. employment report released on Wednesday showed more
private sector job losses than expected. []
Gold should enjoy stronger demand if the data causes the
dollar to slip.
SILVER AT ONE-YEAR HIGH
Silver <XAG=> tracked gold higher, hitting its highest
level since Aug. 7, 2008 at $16.26 an ounce. The metal, which
is usually less liquid and more volatile than gold, was last at
$16.11, against $15.34 on Wednesday.
It outpaced base metals such as copper, with which silver,
as an industrial as well as an investment metal, often moves.
Gold's solid gains also drove other precious metals higher,
platinum <XPT=> was at $1,248.50 an ounce against $1,229, while
palladium <XPD=> was at $290 against its previous finish of
$284.50.
(Reporting by Frank Tang and Jan Harvey; Editing by David
Gregorio)
Close Change Pct 2008 YTD
Chg Close Pct Chg
US gold <GCZ9> 997.70 19.20 2.0 884.30 12.8
US silver <SIZ9> 16.290 0.925 6.0 11.295 44.2
US platinum <PLV9> 1253.80 23.70 1.9 941.50 33.2
US palladium <PAZ9> 294.05 5.10 1.8 188.70 55.8
Prices at 4:02 p.m. EDT (2002 GMT)
Gold <XAU=> 992.25 15.65 1.6 878.200 13.0
Silver <XAG=> 16.12 0.78 5.1 11.30 42.7
Platinum <XPT=> 1248.50 19.50 1.6 924.50 35.0
Palladium <XPD=> 290.00 5.50 1.9 184.50 57.2
Gold Fix <XAUFIX=> 983.00 18.25 1.9 836.50 17.5
Silver Fix <XAGFIX=> 15.730 0.820 5.5 14.760 6.6
Platinum Fix <XPTFIX=> 1241.00 0.00 0.0 1529.00 -18.8
Palladium Fix <XPDFIX=> 290.00 0.00 0.0 365.00 -20.5
