(Recasts with quotes, prices, changes dateline, pvs SINGAPORE)
By Atul Prakash
LONDON, Jan 11 (Reuters) - Gold hit a record high just under
$900 an ounce on Friday, driven by hopes of a U.S. rate cut that
could lift the metal's appeal as an alternative investment.
Platinum also set a historic peak, silver jumped to its
highest level in 27 years and palladium rose to a two-month
high, but analysts said the metals were vulnerable to sharp
declines because of rapid advances in the past few days.
Spot gold <XAU=> rose as high as $898.00 an ounce before
slipping back to $892.10/892.80 at 1101 GMT, against
$889.90/890.60 in New York late on Thursday.
The dollar held near a five-week low against the euro after
U.S. Federal Reserve Chairman Ben Bernanke said on Thursday the
central bank was ready to take 'substantial' measures to shore
up a slowing economy.
Bernanke acknowledged the U.S. economy faced increased risks
and indicated the U.S. central bank is ready to cut interest
rates aggressively to support growth []. The Fed
has already cut rates a full percentage point since September.
"The market has been well set up for a run at $900 by the
dollar's reaction to Bernanke's speech. But even though we are
less than about $5 away, it will face stiff resistance," Tom
Kendall, metals strategist at Mitsubishi Corp.
"Another sharp correction, before the next big figure is
broken, would not be surprising," he said.
U.S. gold futures also touched a record high, with the most
active February contract <GCG8> rising as high as $899.90 an
ounce before slipping to $896.3, up $2.7 from Thursday's close.
Spot metal has surged 48 percent in the past 12 months and
is up 13 percent in the last 30 days.
"$900 BEFORE PULL-BACK"
"It has come a long way very fast. While the fundamentals
are very good, we could expect a pick up in gold scrap sales
soon. Central banks have not been selling into strength, but
this could change," said David Thurtell, analyst at BNP Paribas.
"Probably gold will print $900 before it pulls back."
In the physical sector, fears of further rises ignited
buying from jewellers in Indonesia and Thailand, but retail
investors in other parts of Asia, especially Japan, cashed in on
their holdings to take advantage of sky-high prices.
Gold bars were offered at discount of 40 U.S. cents to spot
London prices in Tokyo from minus 25 cents last week due to
heavy selling from retail investors <GOLD/ASIA1>.
The key gold futures contract for December 2008 delivery
<0#JAU:> on the Tokyo Commodity Exchange TOCOM hit an intraday
high of 3,182 yen per gram, its best level since March 1984. It
ended 51 yen higher at 3,168 yen.
Other precious metals broadly tracked gold's gains. Platinum
<XPT=> rose as high as $1,564 and was last at $1,562/1,566 an
ounce, up from $1,550/1,555 late in New York.
Silver <XAG=> rallied to a high of $16.29 an ounce before
dipping to $16.24/16.29 an ounce, up from $16.12/16.17.
Palladium <XPD=> was up to $375/379 an ounce from $373/376.
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(Additional reporting by Lewa Pardomuan in Singapore)
(Reporting by Atul Prakash; editing by Chris Johnson)
