(Adds quotes, updates prices)
By Atul Prakash and Veronica Brown
LONDON, Jan 11 (Reuters) - Spot gold surged to a record high
just shy of $900 an ounce on Friday as investors poured into the
market, driven by signals that aggressive U.S. rate cuts may be
on the cards.
The run higher in gold spurred other precious metals on,
with platinum hitting a record high and silver surging to
27-year peaks.
Spot gold <XAU=> hit a record $898.00 an ounce, but later
trimmed gains to $896.40/897.10 at 1610 GMT, compared with
$889.90/890.60 quoted in New York late on Thursday.
U.S. gold futures aimed higher, with the most active
February contract <GCG8> hitting a record $900.10 per ounce.
Dealers and analysts said that while the speed of bullion's
current rally had raised the stakes for a corrective sell-off,
bullish sentiment was solid.
"There are a number of drivers that support safe-haven
buying and continued investment demand -- that ranges from
geo-political tensions and expectations for higher inflation to
broader macro-economic concerns," said Suki Cooper, metals
analyst at Barclays Capital.
The dollar remained on the defensive against the euro after
U.S. Federal Reserve Chairman Ben Bernanke said on Thursday that
the central bank was ready to take 'substantial' measures to
shore up a slowing economy.
The Fed has already cut rates a full percentage point since
September. Lower interest rates dent the dollar's yield appeal
-- raising gold's profile as an alternative investment.
"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," said
Tom Kendall, metals strategist at Mitsubishi Corp.
PHYSICAL BUYING REVIVED
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.
Platinum <XPT=> hit a record $1,564 per ounce and was last
at $1,563/1,567 an ounce, from $1,550/1,555 late in New York.
Silver <XAG=> rallied to a 27-year high of $16.29 an ounce
before dipping to $16.24/16.29 an ounce, up from $16.12/16.17.
"Unlike gold, (silver) is still a long way off its all-time
high of $49.45 reached in 1980. We see potential for silver to
follow gold's lead, and if gold continues to rise, silver could
advance as far as $18," Commerzbank analyst Eugen Weinberg said
in a note to clients.
Palladium <XPD=> lagged the other precious metals but was
still firm, last at $376/380 an ounce from $373/376.
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(Additional reporting by Lewa Pardomuan in Singapore)
(Editing by Chris Johnson)
