* ECB chief Trichet hints rate hike may not be one of series
* ECB lifts interest rates by 25 bps, first rise since 2008
* Portugal seeks EU bailout, lifting European shares
(Releads, updates prices, adds comment)
By Jan Harvey
LONDON, April 7 (Reuters) - Gold hit a fresh record high
near $1,465 an ounce on Thursday after European Central Bank
president Jean-Claude Trichet indicated the rate hike announced
by the bank earlier may not be the first in a series.
Spot gold <XAU=> hit a record $1,464.80 an ounce and was bid
at $1,460.50 at 1420 GMT, against $1,457 late in New York on
Wednesday. U.S. gold futures for June delivery <GCv1> were up
$3.80 an ounce to $1,462.30, having peaked at $1,467.
The ECB lifted interest rates by 25 basis points on Thursday
as expected, but Trichet said in a press conference after the
move that the bank had not taken the decision as the first in a
string of such moves. []
"The market had factored in that Trichet would be a bit more
hawkish in his comments," said Peter Fertig, a consultant at
Quantitative Commodity Research. "If you look at government bond
markets, they all recovered during his press conference."
"Of course they will be vigilant in monitoring inflation
developments very closely. But it is more inflation expectations
that made the ECB concerned, and less the actual increase (in
inflation)."
Gold tends to suffer in a rising interest rate environment,
as this raises the opportunity cost of holding non-interest
bearing bullion. Expectations for a rise in euro zone rates kept
a lid on gold's rally to record highs earlier this year.
That came largely on the back of unrest simmering across the
Middle East and North Africa, which has lifted risk aversion,
and boosted oil prices to multi-year highs. []
A NATO air strike killed at least five rebels near the
Libyan port of Brega, medics said, and insurgents reported
Muammar Gaddafi's forces killed five more in a bombardment of
besieged Misrata. []
"The tail risk event remains uncertainty in the Middle East
leading to a supply side-driven spike in the oil price," said
Citigroup in a note.
"Historically the biggest beneficiary under an oil price
spike environment has been gold, with large amounts of petro
dollars being recycled into the yellow metal."
GOLD ETF HOLDINGS SLIP
Holdings of the world's largest gold-backed exchange-traded
fund, New York's SPDR Gold Trust <GLD>, slipped more than 7
tonnes on Wednesday to their lowest since May 2010, their
biggest one-day drop in more than two weeks. []
Interest in ETFs, which issue securities backed by physical
metal, has been muted since the start of the year, with the SPDR
recording its biggest ever quarterly outflow in the first three
months of 2011.
"Other factors have to be used to explain the rally of gold
prices, and there are plenty of them; besides the weak U.S.
dollar, the debt crisis in the euro zone peripherals is also
clearly playing a role," said Commerzbank in a note.
"Portugal bowed to pressure yesterday evening and not
unexpectedly requested financial aid from the EU rescue fund.
The country is set to receive around 80 billion euros as soon as
possible."
Meanwhile, banks led European shares to their highest level
in nearly a month as strategists said interest rate rises would
not derail equities' advance and a bailout for Portugal would
give stability. []
Among other precious metals, silver <XAG=> was bid at $39.48
an ounce against $39.43, just off the previous session's 31-year
high at $39.75. Platinum <XPT=> was at $1,784.24 an ounce versus
$1,787.45, while palladium <XPD=> was at $780.97 versus $778.10.
(Editing by Alison Birrane and Keiron Henderson)
