* Gold hits second record in a row as dollar slides
* Silver at 31-year peaks
* Coming Up: U.S. Midwest manufacturing; 1330 GMT
(Updates with comment, refreshes prices; pvs SINGAPORE)
By Amanda Cooper
LONDON, April 6 (Reuters) - Gold rallied to a second
successive record high on Wednesday, powered by a slide in the
dollar and by ongoing investor demand for safe-haven assets,
while silver hit fresh 31-year peaks.
Unrest across the Arab world and unease over the euro zone's
debt finances are encouraging inflows of cash into gold, which
has risen by more than 2 percent this week.
This has more than offset the potentially damaging impact of
China's latest increase in interest rates and a less pessimistic
take on the U.S. economy from the Federal Reserve.
The focus this week is on Thursday's three central bank
policy meetings, at which the European Central Bank is almost
guaranteed to raise rates, thereby boosting the euro against the
dollar, while the Bank of Japan and the Bank of England are
expected to hold their fire.
Spot gold <XAU=> was last up 0.4 percent at $1,456.25 an
ounce by 0834 GMT, having hit an all-time high of $1,458.80
earlier in the day. Gold has rallied by more than 5 percent in
the past three weeks.
COMEX June gold futures <GCv1> were last up 0.4 percent at
$1,457.80, having touched a contract high of $1,460.00.
"Six months from here, we think (the strength) is
sustainable for both gold and silver, but I wouldn't be
surprised if we see a short-term pullback because a lot of this
is driven by the euro, which is pretty strong against the
dollar," said Standard Bank analyst Walter de Wet.
The dollar fell to 14-month lows against the euro, which
rallied to an 11-month peak against the yen ahead of the first
rate rise from the ECB since July 2008 to tackle rising
inflation pressures. []
THREE BANKS, THREE POLICIES
The minutes from the U.S. Federal Reserve's most recent
meeting, released on Tuesday, did not contain anything to
suggest the central bank would end its $600 billion bond buying
programme ahead of time. <nFEDAHEAD>
"With gold close to its highs, there could be some
reluctance to buy at these elevated levels, especially given the
uncertainty surrounding U.S. monetary policy and the expected
ECB rate hike tomorrow," said UBS strategist Edel Tully.
"While a move to monetary policy tightening is not
necessarily gold-positive, the inflation risks spurring the euro
zone tightening are supportive of gold," she said.
Record-high food prices and oil prices at 2-1/2 year highs
have stoked inflationary pressures around the world, adding to
the case for owning gold, which can help mitigate the impact of
rising price pressures on an investment portfolio.
The world's central banks are tackling inflation by
tightening monetary policy -- a potential negative to gold,
which bears no yield.
But most benchmark interest rates, when adjusted for
inflation, will remain in negative territory, including those in
China, which raised rates on Tuesday for the fourth time since
October. []
Reflecting the pick-up in investor demand for gold was the
first inflow of metal into the SPDR Gold Trust <GLD>, the
world's largest exchange-traded fund, since March 16. []
Global holdings of gold in the largest ETFs are down 3.3
percent, or 2.09 million ounces, so far this year, but have
risen by nearly 200,000 ounces in the last month alone.
Silver has reaped the benefits of investor demand for
safe-haven assets and protection from inflation and on Wednesday
rose to its highest level since January 1980.
Spot silver <XAG=> was last at $39.33 an ounce, having risen
earlier by as much as 0.6 percent to $39.48.
Holdings of silver in the world's largest ETF, the iShares
Silver Trust <SLV> are at a record 11,162.45 tonnes, having
risen by more than 240 tonnes so far this year.
Platinum and palladium were both up on the day, lifted by
strength in other industrial commodities such as copper and
crude oil, which held near 2-1/2 year peaks.
Spot platinum <XPT=> was last up 0.5 percent at $1,793.00 an
ounce, while palladium <XPD=> was up 0.1 percent at $787.22.
(Reporting by Amanda Cooper, editing by Jane Baird)
