(Updates prices, market activity to New York close, paragraphs
2, 7, 14-17)
By Atul Prakash and Anna Ringstrom
LONDON, March 12 (Reuters) - Gold prices rose more than 1
percent on Wednesday as a record low dollar and soaring oil
prices triggered bullion buying, analysts said.
Gold <XAU=> rose to $981.90/982.70 an ounce by New York's
last quote at 2:15 p.m. EDT (1815 GMT) from $971.00/971.80 in
New York late on Tuesday, when it fell on a dollar rally after
central banks announced plans to boost liquidity. During the
session, gold rose as high as $982.00.
"The dollar weakness has helped gold prices," said David
Thurtell, analyst at BNP Paribas, adding prices probably would
find support around $970-$975 until release of U.S. retail
sales and CPI data on Thursday.
"With the market turmoil and the dollar weakness, chances
are good that prices can reach $1,000," he said.
The dollar slumped to record lows against the euro and
major currencies amid uncertainty about the long-term impact of
recent Federal Reserve efforts to boost credit markets.
A weaker dollar makes gold cheaper for holders of other
currencies and often lifts bullion demand.
Gold also is seen as a hedge against oil-led inflation.
U.S. crude futures <CLc1> settled up $1.17 to $109.92 a barrel,
after hitting an all-time high of $110.20 during the session.
Daniel Hynes, metals strategist at Merrill Lynch, said the
outlook for gold remained bullish.
"We are expecting the U.S. dollar to come under increasing
downward pressure and believe the $1,000-an-ounce mark will be
reached pretty soon," Hynes said.
Gold is up about 17 percent since the start of the year, a
rally that has dimmed physical buying in key consuming centers,
although this week's consolidation around $970 has stirred
demand from jewellers in some parts of the world.
"There is a lot of investor interest in gold right now and
investor sentiment is the key driver for gold prices, but
physical demand holds them down," said Dan Smith, metals
analyst at Standard Chartered Bank.
"We expect a broad sideways move in gold prices in the
coming months, though long term we are still quite bullish."
SUPPORTING FACTORS
Gold hit a record high of $991.90 on March 6, and dealers
said record high oil and expectations of further interest rate
cuts in the United States were likely to support the market.
The active U.S. gold contract for April delivery <GCJ8> on
the COMEX division of the New York Mercantile Exchange settled
up $4.50 to $980.50 an ounce.
In industry news, No. 1 gold producer Barrick Gold told the
Reuters Global Mining Summit that it is not convinced there
will be a resolution soon of tax and permit issues delaying its
proposed $2.4 billion Pascua-Lama mine in Argentina, its chief
executive said on Wednesday.
No. 2 Newmont Mining Corp said global gold mine output will
decline over the next decade or so because of production
constraints and past underinvestment in finding new resources.
Meanwhile, Goldcorp expects to start producing gold from
its Penasquito mine in northern Mexico over the next two
months, well ahead of schedule, the Canadian company's Mexico
subsidiary said on Wednesday.
(For other news from the Reuters Global Mining Summit, click
on
http://www.reuters.com/summit/GlobalMiningandSteel08?pid=500)
In other metals, platinum <XPT=> fell as low as $2,003 an
ounce before ending at $2,060/2,070, against $2,050/2,060 late
in New York on Tuesday and a record high of $2,290 hit on March
4.
The metal has risen as much as 50 percent in 2008.
"Platinum prices look set to remain at high levels in the
absence of significant new platinum production from South
Africa or elsewhere," Fairfax investment bank said in a daily
report.
Silver <XAG=> rose to $20.04/20.09 from $19.61/19.66 an
ounce, its previous finish in New York, while palladium <XPD=>
was up at $496/501 an ounce, versus $486/491 late in the U.S.
market on Tuesday.
(Additional reporting by Frank Tang in New York; Editing by
David Gregorio)
