* Precious metals hit 1-week highs on economic optimism
* Rising risk appetite after Fed buoys commods, equities
* Positive Germany, France economic data stirs investment
(Recasts, updates with quotes, closing prices, adds NEW YORK
dateline/byline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Aug 13 (Reuters) - Gold futures ended
higher Thursday on signs of a global economic recovery,
bolstering bullion's status as a hedge against inflation.
A more optimistic economic outlook has spurred renewed
investment interest in riskier asset classes, such as equities
and commodities, while diminishing interest in investments
perceived to be safer, such as Treasuries and bonds, traders
said.
Andrew Montano, a director at Toronto-based bullion dealer
ScotiaMocatta, said that gold turned higher after data showed
that Germany and France returned to economic growth in the
second quarter. []
"We continue to have a fairly positive correlation between
economic activity, reflected by equities indices, and the
precious metals," Montano said.
Montano said physical gold demand has been reasonably good
of late, but retracement was possible if prices rose further.
U.S. December gold futures <GCZ9> settled up $4 at $956.50
an ounce on the COMEX division of the New York Mercantile
Exchange. Earlier in the session, December hit a high of
$963.10, the highest price since Aug. 7.
Spot gold <XAU=> was at $953.20 at 2:15 p.m. EDT (1815
GMT), against $946.05 an ounce late in New York on Wednesday.
Gold was also boosted by follow-through buying after the
U.S. Federal Reserve said on Wednesday economic conditions
showed signs of leveling out, but it would keep interest rates
near zero.
Precious metals rallied early on Thursday as the euro hit a
one-week high against the dollar after Germany and France, the
euro zone's two biggest economies, posted surprise returns to
growth. []
However, the reports contrasted with economic data released
in the United States, where disappointing retail sales and
jobless numbers further weighed on the dollar. []
Oil prices climbed 1 percent and remained above $70 a
barrel. Gold often moves in line with crude, the bellwether
commodity, as it can be bought as a hedge against oil-led
inflation. []
DEMAND SOFT
Demand for physical gold from exchange-traded funds was
soft, however, with holdings of the largest, New York's SPDR
Gold Trust <GLD>, flat for a second day on Wednesday.
[]
"The most important demand driver from the investment side
for the gold ETF is non-existent," said Commerzbank analyst
Eugen Weinberg. "The ETF has been experiencing outflows
recently, so this is not a dynamic component."
Other precious metals also hit recent highs earlier in the
session. Silver <XAG=> reached a peak of $15.03 an ounce,
matching its two-month high, while platinum <XPT=> hit a
one-week high of $1,269 and palladium <XPD=> rose as high as
$276.50, the strongest price since Aug. 7..
In later trade, silver ended at $14.92 an ounce against
$14.51, platinum was at $1,263 an ounce against $1,238, and
palladium was at $274.50 against $270.
In other news, South Africa's state power firm Eskom said
it had reached an agreement with unions over pay and a housing
policy, averting a strike that could have led to power cuts and
hurt Africa's biggest economy. []
Close Change Pct 2008 YTD
Chg Close Pct Chg
US gold <GCZ9> 956.50 4.00 0.4 884.30 8.2
US silver <SIU9> 14.987 0.402 2.8 11.295 32.7
US platinum <PLV9> 1272.70 28.30 2.3 941.50 35.2
US palladium <PAU9> 278.15 4.80 1.8 188.70 47.4
Prices at 2:16 p.m. EDT (1816 GMT)
Gold <XAU=> 953.40 7.35 0.8 878.200 8.6
Silver <XAG=> 14.94 0.43 3.0 11.30 32.2
Platinum <XPT=> 1261.00 23.00 1.9 924.50 36.4
Palladium <XPD=> 274.50 4.50 1.7 184.50 48.8
Gold Fix <XAUFIX=> 953.50 6.25 0.7 836.50 14.0
Silver Fix <XAGFIX=> 15.070 0.790 5.5 14.760 2.1
Platinum Fix <XPTFIX=> 1264.00 0.00 0.0 1529.00 -17.3
Palladium Fix <XPDFIX=> 275.00 0.00 0.0 365.00 -24.7
(Editing by Walter Bagley)
