* Gold hits record $1,216.75/oz; fueled by fund interest
* Bullion hits highs in euro, sterling terms
* Platinum basks in gold's glow; vaults $1,500/oz
(Recasts, updates comments, closing prices, market activity,
changes dateline from LONDON)
By Frank Tang
NEW YORK, Dec 2 (Reuters) - Gold hit a record high above
$1,210 an ounce on Wednesday, defying a stronger dollar as
hedge funds and other institutional investors piled into
bullion amid doubts about a nascent economic recovery.
So far this year bullion has gained nearly 40 percent --
driven by central bank buying, paper currency depreciation and
inflation worries -- as governments flooded the system with
money to jolt the economy out of recession.
The metal also reached all-time highs in euro, yen and
sterling terms, according to Reuters data, indicating
independent gold strength.
For a graphic on gold priced in different currencies:
http://graphics.thomsonreuters.com/129/GLD_CURR1209.gif.
For a graphic of gold's inflation-adjusted high, click on:
http://graphics.thomsonreuters.com/129/GLD_PRCINF1209.gif.
COMEX gold floor trader Mihir Dange said that a significant
amount of buying was necessary to drive the gold market to
successive record highs.
"What's really driving gold is a lot of institutional and
hedge fund buying. A lot of people are just saying, 'We are
going to allocate 5 percent of our portfolio to the gold,'"
Dange said.
Spot gold <XAU=> hit a record $1,212.40 an ounce and was at
$1,212.50 at 3:28 p.m. EST (2028 GMT) against $1,196.00 late in
New York on Tuesday. Bullion has risen 17 percent since the
start of November.
U.S. February gold futures <GCG0> settled up $12.80, or 1.1
percent, at $1,213 an ounce on the COMEX division of NYMEX.
Investment sentiment is particularly bullish after news
that large fund managers John Paulson and Paul Tudor Jones are
joining other big names to buy gold, and expectations that
central banks from emerging countries would continue to acquire
bullion.
Bullion holdings of the world's largest gold-backed
exchange-traded fund, the SPDR Gold Trust <GLD>, rose to
1,130.604 tonnes on Tuesday, near the record 1,134.03 tonnes
hit in June. []
"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," said Lars
Steffensen, managing director of Essex-based Ebullio Capital
Management.
Although the dollar held broadly firmer against the euro
and other major currencies, 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.
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."
CENTRAL BANK BUYING
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 price rally that month.
"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.
Platinum also shot to its highest since August 2008 at
$1,506.50 an ounce <XPT=>. Silver and palladium hit their
highest levels since July last year.
Spot silver <XAG=> was at $19.20 an ounce against $19.07,
and palladium <XPD=> at $386.50 against $380.
Spot platinum was at $1,495 an ounce against $1,478.50.
Close Change Pct 2008 YTD
Chg Close % Chg
US gold <GCG0> 1213.00 12.8 1.1 884.3 37.2
US silver <SIH0> 19.325 0.115 0.6 11.295 71.1
US platinum <PLF0> 1506.30 19.70 1.3 941.50 60.0
US palladium <PAH0> 390.00 6.05 1.6 188.70 106.7
Prices at 3:50 p.m. EST (2050 GMT)
Gold <XAU=> 1212.50 16.50 1.4 878.20 38.1
Silver <XAG=> 19.20 0.13 0.7 11.30 69.9
Platinum <XPT=> 1498.00 19.50 1.3 924.50 62.0
Palladium <XPD=> 386.50 6.500 1.7 184.50 109.5
Gold Fix <XAUFIX=> 1212.50 1.00 0.1 836.50 44.9
Silver Fix <XAGFIX=> 19.18 46.00 2.5 14.76 29.9
Platinum Fix <XPTFIX=> 1485.00 7.00 0.5 1529 -2.9
Palladium Fix<XPDFIX=> 386.00 2.00 0.5 365.0 5.8
(Additional reporting by Jan Harvey in London; Editing by
Christian Wiessner)
((frank.tang@thomsonreuters.com; +1 646 223 6126;
Reuters Messaging: frank.tang.reuters.com@reuters.net))
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