* Dollar index slides to 15-month lows
* Biggest gold miner sees potential for record margins in Q4
* Union says has go-ahead for strike at Gold Fields
(Updates palladium, prices)
By Jan Harvey
LONDON, Nov 11 (Reuters) - Gold hit record highs near $1,120
an ounce on Wednesday as the dollar index <.DXY> fell to
15-month lows, with expectations that an erratic U.S. economic
recovery will keep American interest rates low.
The metal is now poised for more gains, analysts said, with
the weak dollar helping gold build on a rally that began last
week after the IMF sold 200 tonnes of bullion to India's central
bank, raising the prospect of more official sector buying.
Spot gold <XAU=> hit a high of $1,117.95 an ounce and was
bid at $1,115.75 at 1441 GMT versus $1,105.30 late on Tuesday.
U.S. gold futures for December delivery <GCZ9> on the COMEX
division of the New York Mercantile Exchange rose $12.90 to
$1,115.40 an ounce.
"Today's move has been largely a dollar story -- you've got
euro/dollar testing fresh lows, the same with the dollar index,"
said Daniel Major, an analyst with RBS Global Banking & Markets.
"The trend for dollar weakness seems to be reasonably firmly
in place, which of course is supporting gold."
The dollar index fell a quarter of a percent to a 15-month
low of 74.831 and the euro rose to a two-week peak within sight
of last month's 2009 high of just over $1.5060. []
Analysts said the dollar was smarting after Fed officials
said on Tuesday that high unemployment and sluggish consumer
spending were risks to recovery in the U.S. economy, which may
keep the Fed funds rate low. [].
Weakness in the unit boosts gold's appeal as an alternative
asset, and makes dollar-priced commodities cheaper for holders
of other currencies.
Gold prices also rose in non-dollar terms. Euro-denominated
gold <XAUEUR=R> reached its highest since March at 743.27 euros.
"The way gold keeps accelerating away from its previous
highs is quite incredible," said Saxo Bank senior manager Ole
Hansen. "Continued momentum is driving prices higher. Whenever
we see new highs, we see more momentum buying."
BARRICK SEES RECORD MARGINS
In supply news, Barrick Gold Corp <ABX.TO>, the world's
biggest gold producer, told Reuters it sees the potential for
record margins in the fourth quarter as gold prices hit new
peaks and costs are stable or lower. []
In major gold producer South Africa, the country's biggest
union said it had received the go-ahead from authorities for its
workers to strike at Gold Fields <GFIJ.J> over a disputed
recruitment assessment method. []
On the demand side, physical buying was slack in Asia, with
traders in India -- the world's biggest bullion consumer last
year -- keeping to the sidelines as prices rose. []
Vietnam's central bank said it will allow imports of gold --
banned since May last year -- after bullion prices rose sharply
in recent days, potentially opening up a new source of demand.
[]
Interest in gold exchange-traded funds also remained soft,
with holdings of the largest bullion-backed ETF, New York's SPDR
Gold Trust <GLD>, unchanged on Tuesday. []
But with the prospect of persistent dollar weakness boosting
fund interest in gold and further central bank purchases seen as
a distinct possibility, the outlook for gold prices is positive.
U.S. investment bank Goldman Sachs said on Tuesday gold
could rise to record highs in a range from $1,150 to $1,200 an
ounce, driven by falling real interest rates and renewed buying
interest by central banks. []
Among other precious metals, spot silver <XAG=> was bid at
$17.63 an ounce against $17.32, tracking gold higher, while
platinum <XPT=> was at $1,368 an ounce against $1,349.50.
Palladium <XPD=> was bid at $343.00 against $331.50.
Earlier it touched $346.75 an ounce, the highest since
August 2008, partly because of fund buying and partly because
demand expectations have been bolstered by strong car sales data
from China, traders said. []
For graphic of gold's performance in different currencies,
click on:
http://graphics.thomsonreuters.com/119/CMD_GLDCUR1109.gif
For graphic of gold in relation to inflation expectations,
click on:
http://graphics.thomsonreuters.com/119/GLD_TPSS1109.gif
(Additional reporting by Pratima Desai and Humeyra Pamuk;
Editing by Sue Thomas)
