* Gold at 3-week high, silver rising toward 30-year peak
* Precious metals rally on thin holiday turnover
* Dollar falls against a basket of currencies
* Coming up: Year-end light-volume rally in focus
(Recasts, adds comments, updates market activity, changes
byline/dateline, previously LONDON)
By Frank Tang
NEW YORK, Dec 29 (Reuters) - Gold climbed to its highest in
three weeks and silver rose toward a 30-year high on Wednesday,
as thin volume and a weaker dollar drove bullion to within $20
of its record.
Gold buying was boosted as the dollar fell against the yen,
euro and some commodity-driven currencies such as the
Australian and New Zealand dollars. [] Precious metals
extended gains from the previous session, when bullion jumped
over 1.5 percent on doubts over U.S. economic recovery.
"Volume is light and somebody's making a decision on
whether to own some gold or to cover some short positions at
the end of the year. It can change in any given time during the
day," said George Nickas at futures broker FC Stone.
After several weeks of trendless trade, gold staged its
biggest two-day gain since Dec. 6 as many investors bet that
economic uncertainty and currency diversity would fuel more
demand from investors and banks. Prices are on track to rise 28
percent this year, a record 10th consecutive annual gain.
Analysts said that Tuesday's dismal U.S. economic data with
an unexpected deterioration in U.S. consumer confidence and a
sharp fall in U.S. single-family home sales suggested the
Federal Reserve will maintain an accommodative monetary policy
in 2011.
Spot gold <XAU=> rose 0.4 percent to $1,411.49 an ounce by
12 p.m. EST (1700 GMT), having earlier setting a three-week
high of $1,412.65. U.S. gold futures for February delivery
<GCG1> were up $6.60 an ounce at $1,412.20.
Silver led the rally again as it has for the past few
months, after setting a three-week high of $30.64 an ounce.
Spot silver <XAG=> rose 1.2 percent to $30.61, driven by a
broad push higher across the commodities complex, with copper
<CMCU3> at record highs and crude oil steadying above $91 a
barrel. [] []
The gold-silver ratio, used to measure how many ounces of
silver is used to buy an ounce of gold, slumped to a new
46-month low of 46.1, extending its steady decline since
August. It has averaged about 63 over the past year, and
dropped below 45 only twice in the past 25 years.
Silver is one of the best-performing commodities so far
this year, gaining over 80 percent.
Gold is also on track for a near 30-percent gain this year,
fueled by investors seeking an alternative to increasingly
volatile currencies, stocks and bonds, against a backdrop of an
uncertain U.S. economic outlook and Europe's debt crisis.
"Is gold a bubble? Perhaps, but the trend is still clearly
'from the lower left to the upper right' on the charts and in
all currency varieties," said Independent investor Dennis
Gartman.
Gartman, at times cautious on gold's rally this year, said
earlier this week he was expanding his position by buying
bullion in U.S. dollar terms as central banks stock up.
[]
U.S. Treasury debt prices rose with some bargain hunting
after a poor auction of five-year notes on Tuesday sparked a
sell-off. A sharp rise in U.S. Treasury yields on Tuesday
fueled inflation concerns and added to gold buying. []
(Graphic of asset returns in 2010:
http://r.reuters.com/veq33r)
PALLADIUM NEAR $800/OZ
Palladium hit fresh nine-year highs, driven by expectations
for robust demand next year.
Spot palladium <XPD=> reached a session peak of $793.50,
its highest since March 2001. It gained 0.9 percent to $792 an
ounce.
Palladium has been the top pick of a number of funds and
trading houses, which have cited demand from China, the world's
largest auto market, as one of the prime drivers of consumption
for the metal, which is used in catalytic converters.
Platinum <XPT=> eased 0.3 percent at $1,748.70, but still
near its seven-week highs.
Prices at 12:16 p.m. EST (1716 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCG1> 1412.20 6.60 0.5% 28.8%
US silver <SIH1> 30.645 0.322 1.1% 81.9%
US platinum <PLF1> 1752.10 0.40 0.0% 19.1%
US palladium <PAH1> 794.70 7.50 1.0% 94.4%
Gold <XAU=> 1411.32 5.82 0.4% 28.7%
Silver <XAG=> 30.59 0.33 1.1% 81.7%
Platinum <XPT=> 1749.74 -3.50 -0.2% 19.4%
Palladium <XPD=> 791.47 6.25 0.8% 95.2%
Gold Fix <XAUFIX=> 1412.50 9.00 0.6% 27.9%
Silver Fix <XAGFIX=> 30.44 137.00 4.7% 79.2%
Platinum Fix <XPTFIX=> 1745.00 5.00 0.3% 19.0%
Palladium Fix <XPDFIX=> 791.00 3.00 0.4% 96.8%
(Additional reporting by Amanda Cooper in London and Rujun
Shen in Singapore; Editing by Lisa Shumaker)
