* Gold up 1 pct in Q1, smallest qtly gain since Q3 2008
* Dollar weakness, oil, grains rallies boost bullion
* Silver up 22 pct for Q1, gold/silver ratio falls
* Coming up: U.S. March nonfarm payrolls report Friday
(Rewrites, updates comments, market activity, previously NEW
YORK/LONDON)
By Frank Tang
NEW YORK, March 31 (Reuters) - Gold prices rose nearly 1
percent on Thursday, notching a 10th straight quarterly gain,
as the dollar fell and as rallies in oil and grain prices
boosted gold's appeal as a hedge against inflation.
Ultra-loose monetary policies by central banks, euro zone
debt fears and political unrest across the Middle East have
been major drivers for gold, even as the metal gained only 1
percent, the smallest quarterly rise since 2008, before the
financial crisis took hold.
"The second quarter is going to be another positive quarter
for gold. You still have Middle East and the sovereign debt
crisis, which are certainly far from over, and inflation is
becoming an increasingly important factor," said Bill O'Neill,
managing partner of commodities firm LOGIC Advisors.
"You will see funds continue to be net buyers of gold,
silver and platinum in the second quarter," he said.
Spot gold <XAU=> rose 0.8 percent to $1,435.10 an ounce by
3:57 p.m. EDT (1957 GMT).
U.S. gold futures for June delivery <GCM1> ended up 1.1
percent at $1,439.90, with volume lower than usual as investors
have completed rolling their contracts to June from April on
first-notice day on Thursday.
Bullion also notched its biggest one-day gain in nearly two
weeks, a day before Friday's U.S. non-farm payrolls for March,
considered a key indicator of the health of the U.S. economy.
[]
Investors bought gold to hedge against uncertainty related
to Friday's job report, traders said. Inflation worries also
benefited gold as oil rallied on supply worries from the Middle
East, and as grains surged as strong demand whittled down
stocks. [] []
On charts, the metal is expected to break out of its recent
base and rally toward a record $1,500 an ounce, after it has
built up a large space to consolidate recent gains from the
latter half of 2010. []
Silver <XAG=> gained 0.7 percent to $37.71 an ounce. Silver
posted a ninth consecutive quarterly gain, with a 22 percent
increase in the first three months of the year, as investors
bet on further gains in gold and expectations that industrial
demand will improve.
Earlier in Thursday's session, the gold/silver ratio
dropped below 38, its lowest level since 1983.
(Graphic: http://link.reuters.com/dyw78r)
EURO ZONE DEBT JITTERS
Gold was also supported as the euro outperformed the dollar
on inflation data that firmed expectations the European Central
Bank would raise interest rates, but the unit's strength may
prove temporary, with peripheral debt issues seen persisting in
the second quarter.
Concerns over euro zone sovereign debt were a major factor
in last year's 30 percent rise in the price of gold.
On Thursday, rating agency Moody's warned further sovereign
ratings downgrades for euro zone countries could not be ruled
out, which fed ongoing investor concern about the region's
finances. []
The prospect of monetary tightening in the United States
and the euro zone has undermined some of the appeal for gold,
which has seen a net outflow of 2.18 million ounces of metal,
or 3.5 percent, from the major exchange-traded funds this
year.
Signs the U.S. jobs market is recovering could support
calls from some Federal Reserve officials to wind up the
central bank's monetary easing program earlier than expected.
Platinum <XPT=> rose less than $1 to $1,766.49 an ounce,
while palladium <XPD=> gained 1.4 percent to $762.47.
Prices at 3:57 p.m. EDT (1957 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCM1> 1439.90 15.00 1.1% 1.3%
US silver <SIK1> 37.888 0.377 0.0% 22.5%
US platinum <PLN1> 1783.20 9.10 0.5% 0.3%
US palladium <PAM1> 767.90 9.80 1.3% -4.4%
Gold <XAU=> 1435.10 11.72 0.8% 1.1%
Silver <XAG=> 37.71 0.27 0.7% 22.2%
Platinum <XPT=> 1766.49 0.64 0.0% -0.1%
Palladium <XPD=> 762.47 10.69 1.4% -4.6%
Gold Fix <XAUFIX=> 1439.00 8.00 0.6% 2.0%
Silver Fix <XAGFIX=> 37.87 34.00 0.9% 23.6%
Platinum Fix <XPTFIX=> 1773.00 2.00 0.1% 2.4%
Palladium Fix <XPDFIX=> 766.00 5.00 0.7% -3.2%
(Additional reporting by Amanda Cooper in London; Editing by
Walter Bagley)
