* Gold surge fuelled by inflation fears
* Deflation seen short-lived
* Platinum boosted, helped by auto sector optimism
(Updates prices)
By Pratima Desai
LONDON, Dec 8 (Reuters) - Gold surged on Monday, boosted by
higher oil prices, a lower dollar and investor concern about
inflationary pressures from the large amounts of money being
pumped into the global economy.
Autocatalyst material platinum <XPT=> jumped more than 6
percent to $840 an ounce, while palladium gained more than 12
percent to $179.50 on growing optimism about a rescue for the
auto industry in the United States. []
Spot gold <XAU=> gained more than 3 percent to $781.7 an
ounce and was at $770.90/771.90 at 1519 GMT from $754.60 in New
York late on Friday, when it fell to $740.40, the lowest since
November 20 in a commodities-wide sell-off.
To some, talk of inflation is premature given the world is
grappling with the prospect of deflation, but forward looking
investors are adding to their holdings of the precious metal to
preserve the value of their portfolios.
"We will see some deflation, but that will be shortlived and
the inflationary impact of substantial fiscal stimulus ... will
inevitably lead to inflation," said John Meyer, analyst at
investment bank Fairfax.
"Gold will be an important commodity in the protection of
value," he said. Fairfax expects gold to average $900 an ounce
next year compared with a previous forecast at $550.
Central banks have pumped cash into the world's financial
system and slashed interest rates in an attempt to ease the
credit crunch and boost confidence.
Chinese and European leaders are due to plot their next
steps on Monday to move the world economy back from a precipice,
while stimulus measures presented, planned or pending injected
optimism into stock markets. []
IMMINENT BAILOUT
Adding to investor worries about inflation was oil <CLc1>,
which rose above $43 a barrel. []
Gold often rises in line with oil, which can trigger
inflation, while a weaker U.S. currency makes metals priced in
dollars cheaper for holders of other currencies. []
The U.S. Senate is set to reconvene later on Monday as
negotiators sought to agree a rescue package for ailing
automakers including at least $15 billion in loans.
Expectations that the plan could be agreed were bolstered
after U.S. President-elect Barack Obama said the auto industry
could not be allowed to collapse.
The news boosted platinum and palladium, used to make
autocatalysts that cut carbon emissions.
Palladium <XPD=> was at $171/179 an ounce from $159.50 on
Friday and platinum at $831/851 from $788.
However, platinum prices are still more than 60 percent
below the record high of $2,290 an ounce hit in March.
"A quick recovery of the platinum price ... does not appear
to be on the cards," metals refiner Heraeus said in a note.
"The outlook on the economic front portrays a very pathetic
picture which will not only hold the industry back, but also
give investors second thoughts on investing in platinum metals."
Spot silver <XAG=> rose more than 9 percent to $10.31 an
ounce and was at $10.18/10.26 from $9.45 on Friday.
The precious industrial metal has in recent weeks moved
alongside base metals such as copper <MCU3>.
"Silver is much more of an industrial metal than gold, with
only 32 percent of fabrication demand going into jewellery,
coins or other decorative end-uses, compared with almost 80
percent of gold," Societe Generale said in a note.
(Reporting by Pratima Desai; editing by xxxx)
