* Gold climbs to new four-month high as dollar slumps
* Oil surges to record on resurgent supply fears
* Equities slide on fresh fears over credit crisis
(Recasts, adds comment, updates prices)
By Jan Harvey
LONDON, July 11 (Reuters) - Gold rallied more than 2 percent
to a four-month high on Friday as the dollar slumped against the
euro, oil soared to a record high and equity markets floundered
on renewed fears over the scope of the credit crisis.
Spot gold <XAU=> was at $962.60/963.60 an ounce at 1404 GMT,
up from $944.10/945.30 late in New York on Thursday. Earlier it
touched a session high of $967.60, its strongest since March 19.
UBS analyst John Reade said "oil, weakness in the dollar and
issues with the agencies" are all conspiring to drive gold
higher.
A fresh jump in oil prices on Friday fuelled initial gains
in gold. Oil climbed more than $5 a barrel as supply fears
intensified in major oil producers Iran and Nigeria, and ahead
of a strike of Brazilian oil workers next week. []
Gold tends to move in line with crude, as it is often bought
as a hedge against oil-led inflation. Strength in oil prices
also boosts the appeal of commodities as an asset class.
The precious metal extended gains as the dollar slid to
2-1/2-month lows against the euro. Gold moves in the opposite
direction to the dollar, as it is often bought as a currency
hedge.
The dollar weakened sharply against the euro on new fears
over the health of the financial markets, as equities slipped on
Wall Street and in Europe. []
Investors are worried about the widening impact of the
credit crisis on the financial sector and the outlook for
government-backed mortgage buyers Fannie Mae and Freddie Mac.
The U.S. stock markets opened lower on Friday after Fannie
Mae and Freddie Mac plummeted before the bell and shed 46
percent and 49 percent respectively at the open. []
The losses came after the White House pressed Congress to
pass new oversight legislation to cover the two companies, which
are seen as having the implicit backing of Washington.
U.S. Treasury Secretary Henry Paulson was due to make a
statement about the companies. []
Stock market weakness also benefited gold in its own right.
"Risk aversion has been sweeping through the markets this
week," said Calyon metals analyst Robin Bhar. "Obviously gold
does well when there's heightened risk aversion, (such as)
concerns about ... the financial system."
Meanwhile platinum ticked up, benefitting from gold's rise,
and as signs of firmer Chinese demand for the metal used in
autocatalysts and ongoing supply fears linked to the South
African supply shortage fuelled buying.
Spot platinum <XPT=> rose to $2,025.00/2,045.00 an ounce
from $1,994.50/2,014.50 late in New York, having earlier hit a
one-week high of $2,045.00 an ounce.
Among other precious metals, spot palladium <XPD=> rose to
$452.00/460.00 an ounce from $449.00/457.00 an ounce late in New
York, while silver <XAG=> rose to $18.72/18.77 an ounce from
$18.28/18.33 late in New York.
(Reporting by Jan Harvey; editing by Christopher Johnson)
