* Gold rises to record high in euro terms
* Dollar extends losses after Federal Reserve action
(Updates prices, adds comment)
By Jan Harvey
LONDON, Oct 7 (Reuters) - Gold climbed, hitting a new
all-time high in euro terms according to Reuters data, as fears
over the outlook for the financial sector spurred buying, and as
the dollar weakened against the euro.
Rising oil prices are also underpinning gains.
Spot gold <XAU=> rose to a session high of $890.60 before
settling back to trade at $878.00/880.00 at 1424 GMT, up from
$857.45 an ounce in late New York trade on Monday.
In euro terms, gold rose to a new record of 654.22 euros an
ounce, up from 635.29 euros late on Monday.
"Gold's strength has been masked by the dollar," VM Group
analyst Matthew Turner said. "The price today in euros is at an
all-time high. Coin sales have been soaring and ETF demand is
strong. There is a lot of demand out there for gold."
Firmer oil prices also support gold. Crude rose more than $3
a barrel after a 100 basis point interest rate cut by the Bank
of Australia raised hopes that other policymakers would follow
suit, potentially boosting the economic outlook and consequently
demand for crude. []
A further spike in oil prices on reports that a U.S.
warplane violated Iran's territory sent gold to session highs.
However, both oil and gold retreated when the reports were
downplayed. []
The dollar, a key external driver of gold,extended losses
against the euro after steps from the Federal Reserve to
backstop the U.S. commercial paper market boosted risk appetite.
[]
The Fed said it is creating a special-purpose facility to
buy commercial paper, in an emergency move designed to calm
chaotic financial markets. []
Gold typically moves in the opposite direction to the
dollar, as it is often bought as an alternative investment to
the U.S. currency.
MACRO SUPPORT
Support for gold prices from the rocky economic situation
looks set to remain firm, analysts say, with prices potentially
climbing further if the outlook worsens.
"Given the uncertainty and risk that is being generated in
the financial markets, it looks very likely that more
institutional safe-haven buying might enter the arena,
pushing prices to new highs," said ScotiaMocatta analysts.
Physical demand for coins and bars is also strong, while
jewellery buying is expected to increase going into the fourth
quarter.
Platinum and palladium prices also rose, with platinum
returning to the $1,000 an ounce level for the first time in
three sessions.
Platinum was quoted at $1,005.50/1,025.50, up from $961.50
late in New York on Monday. Palladium <XPD=> was at $199/209 an
ounce, up from $194.
Among other precious metals, silver <XAG=> was at
$11.53/11.63 an ounce. Late in New York on Monday it was quoted
at $11.01 an ounce.
(Reporting by Jan Harvey; editing by Michael Roddy)
