* U.S. inflation data, dollar drop boosts gold
* Sentiment improved as Paulson starts new gold fund
* Silver, platinum, palladium hit highest in over a year
(Recasts, updates comments, closing prices, market activity,
adds NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Nov 18 (Reuters) - Gold rose to a record
high above $1,150 an ounce on Wednesday as
stronger-than-expected U.S. consumer prices and a steadily
weakening dollar stirred inflation fears.
Market sentiment also improved after news that billionaire
hedge fund manager John Paulson is launching a new gold fund,
including $250 million of his own personal investment.
[]
Doubts about a nascent economic recovery and worries about
the consequence of unprecedented quantitative easing also
increased gold's appeal as a safe haven.
"There is a lurking concern in the background that still
exists," said Bill O'Neill, partner at LOGIC Advisors, noting
that investors were worried about the vulnerability of banks
and the financial system.
Spot gold <XAU=> hit an all-time high of $1,152.75 an ounce
and was at $1,142.55 an ounce at 3:08 p.m. EST (2008 GMT),
against $1,141.50 late in New York on Tuesday.
U.S. December gold futures <GCZ9> settled up $1.80 at
$1,141.20 an ounce on the COMEX division of NYMEX.
The metal remains firmly underpinned by technical support
after several days of gains and is likely to break through to
further fresh highs in coming sessions after a buildup of
momentum, analysts said.
"This is a sentiment-driven market, which means that should
data confirm expectations, the market trades on it. Otherwise,
it ignores it," said Commerzbank analyst Eugen Weinberg.
"The liquidity is still there, risk appetite is still
there, the dollar is weak, so all the factors which have been
in place for weeks and months are still in place."
Gold is attracting a new wave of investment as it pushes
through key technical resistance levels to fresh highs.
The euro rose to a session high against the dollar on
Wednesday on benign U.S. inflation data, while the dollar
index, which measures the U.S. currency's performance against a
basket of six others, was down 0.4 percent. []
NON-DOLLAR GOLD CLIMBS
Gold denominated in currencies other than the U.S. dollar
gained ground, reaching the highest levels since late February
in euro <XAUEUR=R> and sterling terms <XAUGBP=R> and since May
when priced in the Australian dollar.
The news that Paulson will launch a new gold fund stirred
investment buying in gold.
Paulson is among a number of hedge fund managers stocking
up on the precious metal, for centuries considered a hedge
against inflation, as governments around the world ramp up
spending to combat recession.
Gold's strength also lifted other precious metals, with
silver hitting a 16-month high at $18.83 an ounce, platinum
reaching a peak of $1,463.50, its highest since September 2008,
and palladium reaching a 15-month high of $376.
Silver <XAG=> was last at $18.52 an ounce against $18.40,
while platinum <XPT=> was at $1,439.50 an ounce against $1,453
and palladium <XPD=> was at $368.50 versus $370.
Close Change Pct 2008 YTD
Chg Close % Chg
US gold <GCZ9> 1141.20 1.8 0.2 884.3 29.1
US silver <SIZ9> 18.415 0.028 0.2 11.295 63.0
US platinum <PLF0> 1452.00 -10.50 -0.7 941.50 54.2
US palladium <PAZ9> 374.15 2.15 0.6 188.70 98.3
Prices at 2:44 p.m. EST (1944 GMT)
Gold <XAU=> 1143.15 1.65 0.1 878.20 30.2
Silver <XAG=> 18.50 0.10 0.5 11.30 63.7
Platinum <XPT=> 1438.50 -14.50 -1.0 924.50 55.6
Palladium <XPD=> 367.50 -2.500 -0.7 184.50 99.2
Gold Fix <XAUFIX=> 1149.00 3.00 0.3 836.50 37.4
Silver Fix <XAGFIX=> 18.74 64.00 3.5 14.76 27.0
Platinum Fix <XPTFIX=> 1449.00 10.00 0.7 1529 -5.2
Palladium Fix<XPDFIX=> 372.00 3.00 0.8 365.0 1.9
(Reporting by Frank Tang and Jan Harvey; editing by Jim
Marshall)
