Gold eases but holds near record

Thursday, 30 September 2010 23:40 - - {{hitsCtrl.values.hits}}

(Reuters) - Gold ticked lower on Thursday, but held within sight of a record hit as it headed for an eighth straight quarterly gain, with prospects for a weaker dollar in focus on possible further U.S. monetary easing.

Sales of gold scrap persisted in Southeast Asia but volume was small, while Chinese consumers bought some quantity of physical silver despite prices at near 30-year high. Palladium firmed after rallying to its strongest since early 2008 on Wednesday, while platinum was below a four-month high.

Spot gold eased 60 cents to $1,308.15 an ounce by 0457 GMT (12:57 a.m. EDT)after hitting a lifetime high around $1,313 on Wednesday -- its 10th record high in the past 12 trading days.

Gold has gained as much as 19.8 percent this year, heading for its 10th consecutive annual gain.

“The market may have consolidation within this $10 range, but I would expect it to sustain the rally because the momentum has not changed yet,” said a bullion dealer at Bank of China in Hong Kong.

“It’s not easy to predict the resistance level, but we will try to hit another record high in the next few days.”

The dollar struggled near the week’s lows against the yen on Thursday and held near a five-month low on the euro, hit by expectations of more Federal Reserve easing.

The Federal Reserve has inched closer to fresh steps to aid the world’s largest economy, but Fed officials disagreed on Wednesday on what should prompt more support and what impact more asset purchases could have.

U.S. gold futures for December delivery was steady at $1,309.5 an ounce, not far from Wednesday’s record at $1,314.80.

Prospects of moves by the Fed to inject liquidity into the monetary system to tackle the sluggish U.S. economy could dilute the dollar’s value, and boost investment in bullion as an alternative asset.

“Scrap from Indonesia and Thailand continues to enter the market but the quantity is not fantastic. I guess because clients are afraid gold will move higher again,” said a physical dealer in Singapore. “The Chinese bought some silver this morning.”

Silver, often considered the poor man’s gold, normally tracks gold, but an increase in ETF holdings to record levels as well as purchases from physical buyers showed there was a pick up in interest in the white metal.

The world’s largest silver-backed exchange-traded fund, the iShares Silver Trust, said its holdings rose to a record high of 9,786.47 tonnes by Sept 29 from 9,756.04 tonnes on Sept 28. For details of the ETF’s silver holdings.

Silver’s main sources of demand are for use in industrial applications such as semi-conductors and jewelry.