* SPDR Gold holdings <XAUEXT-NYS-TT> unchanged since Oct. 7
* Dollar weakens on view Fed to keep rates near zero
By Chikako Mogi
TOKYO, Oct 20 (Reuters) - Gold rose above $1,060 an ounce on
Tuesday to near last week's record highs, as weakness in the
dollar helped bullion maintain its appeal as a currency
alternative.
Record speculative net long futures positions, weak physical
demand and scrap hitting the markets as prices hover near record
peaks are slowing gold's climb back to their highs.
But market expectations for U.S. interest rates to stay near
zero for several more months continue to weigh on the dollar,
whose weakness makes bullion less expensive for holders of other
currencies.
At the same time, a lack of momentum in gold's rise despite
the dollar hitting a 14-month low against the euro suggests there
is slight wariness about the risk of U.S. interest rates rising
sooner than many think, some analysts said.
The Federal Reserve holds its policy meeting on Nov. 3-4 and
few expect the U.S. central bank to raise interest rates at the
meeting.
"If it's confirmed that the Fed does not raise interest rates
at next month's meeting, the dollar likely will face renewed
selling pressure, hoisting gold to fresh highs," said Masayo
Kondo, president at Fisco Commodity Inc.
"While the chance of a rate rise is very small, there is also
growing wariness that the Fed may make suggestions at the meeting
about the future course of interest rates, and that is keeping
funds from aggressively putting money into gold," he said.
Oil's jump towards $80 put upward pressure on U.S. gasoline
prices and worries about rising prices could make it easier for
the Fed to justify nudging up rates from near zero, Kondo said.
Spot gold <XAU=> was at $1,064.5 per ounce at 0115 GMT, up
0.3 percent from $1,060.70 in late New York trade on Monday.
U.S. gold futures for December delivery <GCZ9> were at
$1,065.6 per ounce, up nearly 1 percent from $1,058.10 in the
COMEX division of the New York Mercantile Exchange.
Last week, spot gold soared to an all-time high of $1,070.40
an ounce, while New York gold futures hit a record peak of $1,072
on the greenback's weakness.
Near-term resistance is seen around $1,068, a level it took
time to break through, when it hit a record high of $1.070.40 on
Oct. 14. Support is seen at $1,055.43, the 10-day moving average.
Oil <CLc1> hovered near 1-year highs on Tuesday after rising
more than 1 percent towards $80 a barrel the previous day when
stronger U.S. company earnings raised optimism about the economy
and offset weak fundamentals. Oil hit a high of $79.61 on Monday.
[]
Rising oil prices support gold as a hedge against oil-induced
inflation risks.
A nationwide strike by miners in Peru, the world's sixth
largest gold producer, also improved buying sentiment.
Reflecting slowing investor inflows into gold, the world's
largest gold-backed exchange-traded fund, the SPDR Gold Trust
<GLD>, said its holdings stood at 1,109.314 tonnes as of Oct. 19,
unchanged since Oct. 7. The holdings rose to a record high of
1,134.03 tonnes on June 1. []
PRICES
Precious metals prices at 0120 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1064.70 2.00 +0.19 20.97
Spot Silver 17.84 0.06 +0.34 57.60
Spot Platinum 1360.00 4.50 +0.33 45.92
Spot Palladium 332.00 0.00 +0.00 79.95
TOCOM Gold 3107.00 26.00 +0.84 20.75 30808
TOCOM Platinum 3967.00 41.00 +1.04 49.59 6722
TOCOM Silver 518.80 9.70 +1.91 62.48 215
TOCOM Palladium 968.00 9.00 +0.94 76.00 99
Euro/Dollar 1.4977
Dollar/Yen 90.47
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Additional reporting by Bruce Hextall in Sydney; Editing by
Edwina Gibbs)
