* Dollar up a shade vs currencies after briefly softening
* Prospects of fresh cenbank buying, inflation support gold
* SPDR gold ETF holdings rise to highest since late June
(Recasts, updates comments, closing prices, market
activity, adds NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Nov 24 (Reuters) - Gold turned higher on
Tuesday despite a slightly higher dollar, as the metal remains
firmly underpinned by investment demand based on the prospect
of rising inflation and more gold acquisitions by the official
sector.
Gold prices have risen 12 percent since the beginning of
November, when reports emerged that India's central bank had
bought 200 tonnes of gold from the IMF. Russia, Sri Lanka and
Mauritius have all since also announced gold acquisitions.
"If central banks buying gold are diversifying their
reserves back from the U.S. dollar to gold or other assets,
that is a sign that (investors) should stay long gold and short
the dollar," said Deutsche Bank trader Michael Blumenroth.
"As long as the market is thinking there is inflation to be
expected next year...central banks are buyers rather than
sellers, and there is fresh investment money flowing into the
market, there is no way you want to sell gold," he added.
Spot gold <XAU=> was at $1,167.50 an ounce at 3:23 p.m. EST
(2023 GMT), having risen as high as $1,171.10 in earlier trade,
against $1,165.85 late in New York on Monday -- when bullion
hit a record high of $1,173.50 an ounce.
U.S. December gold futures <GCZ9> settled up $1.10 at
$1,165.80 an ounce on COMEX division of the NYMEX.
The dollar initially fell against a currency basket on
Tuesday after preliminary data showed the U.S. economy grew at
a slower pace in the third quarter than previously thought, but
it later recovered to trade a shade higher. []
Its recovery has pressured gold from its earlier highs. A
near 2 percent drop in oil prices to nearly $76 a barrel ahead
of U.S. stocks data later in the session also weighed. []
Options-related buying also boosted the U.S. gold market.
Open interest in COMEX gold futures rose sharply after December
gold options' expiration on Monday, dealers said.
Analysts are confident fresh investment interest in gold
will lift it once more.
"Definitely prices could still go higher -- $1,200 is
within reach, and there is no reason why it should not be
reached this calendar year," said Peter Fertig, a consultant at
Quantitative Commodity Research.
WHOLESALE DEMAND
Gold's correction from record highs in earlier trade led to
a pick-up in wholesale demand for the metal in major bullion
consumer India, traders said.
Analysts and fund managers say that in addition to dollar
weakness, inflation prospects in 2010 and more official sector
buying are set to support prices.
For graphic showing gold's relationship to inflation
expectations, click on:
http://graphics.thomsonreuters.com/119/GLD_INFP1109.gif
However, Mark Johnson, portfolio manager of the $1.6
billion USAA Precious Metals and Minerals Fund <USAGX.O>, said
that gold could retreat 10 to 15 percent in the near term
before recovering due to a resurgent dollar in overbought
market conditions. []
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said its holdings stood at 1,121.457
tonnes as of Nov. 23, up 3.964 tonnes from the previous
business day and their highest since late June. []
Silver <XAG=> was at $18.52 an ounce versus $18.59,
platinum <XPT=> at $1,446.50 an ounce against $1,454.50, and
palladium <XPD=> at $369.75 an ounce against $369.
Close Change Pct 2008 YTD
Chg Close % Chg
US gold <GCZ9> 1165.80 1.1 0.1 884.3 31.8
US silver <SIZ9> 18.455 -0.155 -0.8 11.295 63.4
US platinum <PLF0> 1443.80 -23.80 -1.6 941.50 53.4
US palladium <PAZ9> 369.25 -4.05 -1.1 188.70 95.7
Prices at 3:21 p.m. EST (2021 GMT)
Gold <XAU=> 1167.00 1.15 0.1 878.20 32.9
Silver <XAG=> 18.50 -0.09 -0.5 11.30 63.7
Platinum <XPT=> 1443.50 -11.00 -0.8 924.50 56.1
Palladium <XPD=> 369.75 0.750 0.2 184.50 100.4
Gold Fix <XAUFIX=> 1163.25 -7.00 -0.6 836.50 39.1
Silver Fix <XAGFIX=> 18.57 -19.00 -1.0 14.76 25.8
Platinum Fix <XPTFIX=> 1458.00 5.00 0.3 1529 -4.6
Palladium Fix<XPDFIX=> 371.00 0.50 0.1 365.0 1.6
(Reporting by Frank Tang and Jan Harvey; Editing by Marguerita
Choy)
((frank.tang@thomsonreuters.com; +1 646 223 6126;
Reuters Messaging: frank.tang.reuters.com@reuters.net))
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