* Economic hopes buoy demand for bullion
* SPDR gold ETF holdings <XAUEXT-NYS-TT> stay at record high
By Risa Maeda
TOKYO, June 3 (Reuters) - Gold rose above $985 per ounce
again on Wednesday, as a weakening U.S. dollar prompted
investors to buy bullion as a hedge against the deterioration of
the value of their dollar-denominated portfolios.
Hopes that the global economy may be on the road to recovery
also buoyed demand for bullion. Gold is used in electronic
equipment and other products, while concerns about inflation can
also lead investors to pick up the precious metal.
"The U.S. dollar is weak, with the British pound and the
euro are getting stronger, so investor buying continued," said
Dick Poon, manager of precious metals at Heraeus in Hong Kong.
"Right now customers are still bullish on the market, with
many looking to gold prices jumping over an all-time high of
$1,030 (by the end of this year)," he said.
But there is general caution that gold has risen too fast,
keeping the market's topside capped for now, traders said.
Spot gold <XAU=> climbed 0.6 percent to $987.0 per ounce at
0529 GMT from New York's notional close of $980.85 on Tuesday,
when it rose as high as $986.40.
It touched a three-month high of $988.50 on Monday, up
almost 10 percent from the level a month earlier.
U.S. gold futures for August delivery <GCQ9> edged up 0.4
percent to $986.10 per ounce from Tuesday's $988.60 settlement
on the COMEX division of the New York Mercantile Exchange.
In the currency markets, the euro <EUR=> was steady after
hitting a 2009 high of $1.4332 on electronic trading platform
EBS, while sterling hit a seven-month high above $1.6600
<GBP=D4>.
Bullion was also supported by the U.S. government's extra
borrowing making the U.S. Treasury market vulnerable to falls,
traders said, with the benchmark 10-year note yield reaching a
six-month peak of 3.75 percent last week. []
A drop in the appeal of U.S. Treasuries often prompts funds
to buy gold, another safe-haven asset.
"Gold will keep shining for a while, taking advantage of
jitters in the U.S. bond market as well as the weakness in the
U.S. dollar," said Yukuji Sonoda, an adviser to Daiichi
Commodities Co in Tokyo.
"The time for it to test the $1,000 level is well within
sight," he said. That level was last reached in late February.
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said its holdings stayed unchanged on
June 2 from a record 1,134.03 tonnes marked the previous day.
[]
Precious metals prices at 0537 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 986.40 5.55 +0.57 12.07
Spot Silver 16.10 0.16 +1.00 42.23
Spot Platinum 1248.00 9.50 +0.77 33.91
Spot Palladium 248.50 2.00 +0.81 34.69
TOCOM Gold 3048.00 20.00 +0.66 18.46 36038
TOCOM Platinum 3872.00 87.00 +2.30 46.00 18736
TOCOM Silver 492.50 13.10 +2.73 54.24 485
TOCOM Palladium 778.00 31.00 +4.15 41.45 1034
Euro/Dollar 1.4317
Dollar/Yen 95.67
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Additional reporting by Miho Yoshikawa; Editing by Hugh
Lawson)
