* Gold hits record $1,216.75/oz; fuelled by fund interest
* SPDR Gold holdings up for second day
* Gold hits highs in euro, sterling terms
* Platinum basks in gold's glow; vaults $1,500/oz
(adds quotes, updates prices)
By Jan Harvey
LONDON, Dec 2 (Reuters) - Gold hit a record high at
$1,216.75 an ounce in Europe on Wednesday as investors bet on
higher prices, with funds lengthening positions on expectations
for a fresh leg of dollar weakness and more central bank buying.
The metal also reached all-time peaks in euro and sterling
terms and a historic peak when priced in the Japanese yen,
according to Reuters data, indicating independent gold strength.
Spot gold <XAU=> was bid at $1,214.75 an ounce at 1530 GMT,
against $1,196.00 late in New York on Tuesday. U.S. gold futures
also hit a record $1,218.40 an ounce.
Not to be outshone, platinum shot to its highest since
August 2008 at $1,506 per ounce <XPT=>. Silver and palladium hit
their highest levels since July last year.
Although the dollar held a firmer tone against the euro
<EUR=>, fund managers and analysts said low U.S. interest rates
plus fiscal and monetary stimulus would keep the dollar on the
back foot and gold well supported.
"The fact that the dollar has been able to hold around $1.50
against the euro...gives people a resonable expectation that the
dollar is now going to start an attack on the downside toward
$1.60," said Lars Steffensen, managing director of Essex-based
Ebullio Capital Management.
"There's a lot of passive investment, long-only money coming
in every month, and this is a continuation of the pattern we've
seen every month this year," he added.
Investment interest in gold remained firm, with holdings of
the world's largest gold-backed exchange-traded fund, the SPDR
Gold Trust <GLD>, rising to 1,130.604 tonnes on Tuesday, near
the record 1,134.03 tonnes they hit in June. []
Gold also hit historic highs in sterling <XAUGBP=R> terms
and when priced in the euro <XAUEUR=R> and yen <XAUJPY=R>.
Click here for a graphic on gold in different currencies:
http://graphics.thomsonreuters.com/129/GLD_CURR1209.gif.
Traders said options-related activity was also lifting gold
towards fresh peaks.
"At these levels the option strikes are the main focus,"
said Simon Weeks, head of precious metals at the Bank of Nova
Scotia. "Yesterday there was a struggle around $1,200, and now
that we are above there, there will be an increasing pull
towards $1,250."
SCRAP FLOWS
In the physical market, the flow of scrap gold re-entering
the Indian market -- which usually increases when prices rise --
tailed off as sellers sought still higher prices, dealers said.
Gold demand in India cooled on Wednesday as prices jumped to
record highs. Separately, data showed Turkey imported 393 kg of
gold in November, up from 15 kg a year before but down from
4,209 kg in October. [] []
While physical demand in many traditionally key gold buying
countries has been soft, a dip in such buying is being easily
offset by rising speculative interest.
Speculators are betting on further buying by central banks,
particularly in Asia, after many years of net official sector
sales. India's purchase of 200 tonnes of gold, announced in
November, sparked a 13 percent prices rally that month.
The move strengthened speculation that other emerging
country central banks will follow suit. []
"We believe that a key fundamental supporting factor for
gold is the continuing shift of central banks and governments
from being net sellers of gold to net buyers," said Daniel
Sacks, portfolio manager of the Investec Global Gold Fund.
"The gold bull market of the 1970s was in part ushered in by
central bank hoarding of gold," he said. "With central banks
likely to be net gold purchasers this year for the first time
since 1988, a similar scenario appears to be taking shape."
Strength in gold has lifted other precious metals. Silver
<XAG=> and palladium <XPD=> rallied to their strongest levels
since July 2008. Spot silver was later bid at $19.36 an ounce
against $19.07, and palladium at $386.50 against $380.
Spot platinum <XPT=> rose as high as $1,506.00 an ounce, its
highest since August last year. It was later at $1,494 an ounce
against $1,478.50.
For graphic of gold's inflation-adjusted high, click on:
http://graphics.thomsonreuters.com/129/GLD_PRCINF1209.gif.
(Editing by Keiron Henderson)
((jan.harvey@thomsonreuters.com; +44 207 542 7744; Reuters
Messaging: jan.harvey.reuters.com@reuters.net))
