* Gold hits 1-month high as stocks tumble, oil hits record
* Dollar falls to three-week low on equity worries, Fed
comments
* US gold futures posted biggest one-day gains since 1985
(Recasts, updates with quotes, closing prices, market
activity, adds NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, June 26 (Reuters) - Gold ended nearly 4
percent higher on Thursday with funds pouring into commodities
as a tumbling stock market amid oil's surge to a new record
high boosted bullion's appeal as an alternative investment.
Gold <XAU=> was at $912.60/913.60 by New York's last quote
at 2:15 p.m. EDT (1815 GMT), up from $879.60/880.60 an ounce
late in New York on Wednesday. Earlier in the session it
touched $916.40, its highest level since May 27.
Zachary Oxman, senior trader of Wisdom Financial in
Newport, California, cited institutional investors rotating
funds back into commodities due to weaker equities.
"It's a repatriation into the commodity trade, mostly out
of the stock markets. Commodities is still one safe place so
far this year, as stocks have been volatile and tough to make
money," Oxman said.
The U.S. gold contract for August delivery <GCQ8> on the
COMEX division of the New York Mercantile Exchange settled up
$32.80, or 3.7 percent, at $915.10 an ounce.
It was the biggest one-day absolute gain for a COMEX gold
contract on a front-month delivery basis since March 1985.
U.S. stocks sank 2.5 percent in late trade as recession
worries were increased by fears of oil prices rocketing
higher.
In addition, the dollar extended losses against major
currencies as expectations for a U.S. rate hike receded after
comments from the Federal Reserve on Wednesday.
The combination of a weak dollar and a slide in the equity
markets on concerns over the health of the automotive sector
"has been critical for gold," Merrill Lynch analyst Daniel
Hynes said.
"This has set gold off again after it had been stuck in a
trend for a while now," he said.
Platinum and silver tracked gold higher, rising 3 percent
and nearly 5 percent respectively.
The U.S. Federal Reserve dampened hopes for a rate hike,
saying inflation, while still a worry, was likely to temper
later in the year.
"The Fed wasn't as hawkish as the market expected, hence
the dollar is under pressure," said JP Morgan analyst Michael
Jansen.
"People are starting to worry that the Fed might be
slightly behind the inflation story."
Goldman Sachs & Co strategists urged stock investors to
"underweight" U.S. financial and consumer shares, admitting it
was wrong when it upgraded both sectors just seven weeks ago.
[]
Oil <CLc1> , the other main external driver of the gold
price, surged 4 percent to a record $140.39 a barrel.
In industry news, Gold Fields Limited <GFIJ.J> said it has
shut down a shaft of its Kloof Gold Mine in South Africa after
two employees were killed early on Thursday following an earth
tremor.
The company said it has lost 20 kilogrammes of gold from
the closure. []
Meanwhile, spot platinum <XPT=> rose in line with gold,
climbing more than 3 percent to a session high of $2,078.00. It
was last at $2,055.00/2,075.00 an ounce against
$2,004.50/2,024.50 late in New York on Wednesday.
Silver <XAG=> also tracked gold, rising nearly 5 percent to
a session high of $17.36. It was last at $17.13/17.21 an ounce
from its Wednesday U.S. finish of $16.56/16.62 an ounce.
Spot palladium <XPD=> also ended higher at $464.50/472.50
an ounce from $460.00/468.00 an ounce late in the U.S. market
on Wednesday.
(Editing by Jim Marshall)
