(Updates with New York closing price, market activity)
By Atul Prakash and Veronica Brown
LONDON, Jan 24 (Reuters) - Gold surged almost 3 percent to
above $910 per ounce on Thursday, while platinum hit a historic
high above $1,600 as investors seized on dollar weakness and
firm oil to snap up precious metals, analysts said.
Expectations of a further rate reduction by the U.S.
Federal Reserve after a hefty emergency cut this week also
boosted market sentiment, with a low real rate interest
environment favouring gold, they added.
Spot gold <XAU=> hit a high of $910.50 an ounce and was
quoted at $907.00/907.70 by New York's last quote at 2:15 p.m.
EST (1915 GMT), compared with $884.75/885.45 late in New York
on Wednesday. It hit a record high of $914 on Jan. 14.
The active gold contract for February delivery at the COMEX
division of the New York Mercantile Exchange <GCG8> settled up
$22.70 or 2.6 percent to $905.80 an ounce.
Dealers and analysts said tough talk on inflation in the
euro zone from ECB Governing Council member Axel Weber had
concentrated investors minds on the prospect of further dollar
weakness ahead of the Fed meeting next week.
As a weaker dollar makes gold cheaper for non-U.S.
investors, gold was ripe for another rise, they added.
"Gold had to undergo a significant pullback and its already
had that," said David Thurtell, metals analyst at BNP Paribas.
"Maybe when we get the next Fed rate cut, people will see
that dollar-weakness has further to run," he added.
Platinum <XPT=> jumped to a record high of $1,612 an ounce,
helped by gains in gold and after Lonmin Plc <LMI.L>, the
world's No.3 platinum producer, cut its sales outlook for the
year. []
The metal was last quoted at $1,607/1,612, against
$1,551.50/1,556.50 late in New York on Wednesday.
"HISTORICALLY LOW INVENTORIES"
"Platinum prices are set to outperform again this year
given the historically low level of inventories and potential
supply disruptions coupled with robust demand particularly from
the auto-catalyst sector set to keep the market balance in
deficit," Barclays Capital said in a note to clients.
Oil climbed above $89 a barrel, aiding gold as a hedge
against oil-led inflation, after a late surge in U.S. stock
indices helped cool fears of a recession in top energy consumer
the United States. U.S. crude futures <CLc1> finished up $2.42
or 2.8 percent at $89.41 a barrel.
Stock markets were cheered due to hopes a U.S. government
plan to rescue ailing bond insurers would help stem credit
losses.
Gold fell sharply earlier this week, partly due to tumbling
global share prices, which prompted selling of bullion to cover
margin calls. However analysts said gold stood to benefit from
enduring financial market turmoil as that would raise the
metal's safe haven profile.
For the medium term, the market remained bullish.
A Reuters global poll of 50 traders and analysts forecast
average gold prices surging more than 20 percent this year and
gold retaining most gains in 2009 as dollar weakness, market
turmoil and inflation fears stoke investor interest.
[]
In industry news, Peter Hambro Mining <POG.L>, Russia's
second-largest gold miner, said it would take a year longer
than planned to more than triple output to 1 million ounces.
[]
Silver <XAG=> rose to $16.38/16.43 from its Wednesday close
of $15.97/16.02 an ounce, while palladium <XPD=> was up at
$370.50/375.50 an ounce, versus its previous finish of
$362.50/367.50.
(Additional reporting by Frank Tang in New York and Lewa
Pardomuan in Singapore; Editing by David Gregorio)
