(updates with quotes, prices)
By Atul Prakash
LONDON, Jan 15 (Reuters) - Gold rose more than 1 percent on
Tuesday to trade just below record highs as the dollar extended
declines after the release of U.S. retail sales numbers.
Retail sales fell 0.4 percent last month while markets were
expecting no change from November. The numbers provided further
evidence an economic slowdown was spreading to the consumer.
Other key metals also advanced, with platinum near record
highs and silver keeping within sight of a 27-year peak hit on
Monday. Palladium was near a two-month high.
"Another set of substandard U.S. data, relatively weak
dollar and investor buying on the London open when gold looked
set to test support at $900 set the stage for gold's recovery,
as it demonstrated investors are still comfortable buying the
dips," said David Holmes, analyst at Dresdner Kleinwort.
"We remain in an environment where it is possible to test
the highs and make more progress towards the next big
psychological target of $1,000. Clearly, we are not in a long
liquidation phase as there are a lot of financial variables that
remain very much in gold's favour."
Spot gold <XAU=> rose as high as $913.70 an ounce after
falling to a low of $902. It was quoted at $913.20/913.90 by
1536 GMT, against $902.10/902.80 in New York late on Monday,
when it hit an all-time high of $914.
New York gold futures <GCG8> rallied to a record high of
$916.10 an ounce before easing to $914.60, up 11.20 an ounce.
Financial markets expect the U.S. Federal Reserve to cut
interest rates by at least a half percentage point when its
monetary policy panel next meets on Jan. 29-30.
Lower rates reduce the attractiveness of dollar-denominated
securities and demand for dollars to buy them. A weaker dollar
makes gold cheaper for holders of other currencies and often
lifts bullion demand.
"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," said Jeremy
East, head of metals trading at Standard Chartered Bank.
"We are going to see a number of results coming out from
financial institutions and the market would be watching them
very carefully."
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 $16.41/16.46 from $16.31/16.36 an
ounce, but off Monday's 27-year high of $16.58. Palladium <XPD=>
was flat at $379/384 an ounce.
(Additional reporting by Lewa Pardomuan in Singapore and Biman
Mukherji in New Delhi)
(Reporting by Atul Prakash; editing by Peter Blackburn)
