LONDON (Reuters) - Gold touched a fresh high near $1,135 an ounce on Monday as momentum from recent gains and a slide in the dollar index <.DXY> sparked fund buying of the precious metal. Gains in gold boosted interest in other precious metals, with platinum, palladium, silver and rhodium all hitting their strongest in more than a year.
By Jan Harvey
LONDON (Reuters) - Gold touched a fresh high near $1,135 an ounce on Monday as momentum from recent gains and a slide in the dollar index <.DXY> sparked fund buying of the precious metal.
Gains in gold boosted interest in other precious metals, with platinum, palladium, silver and rhodium all hitting their strongest in more than a year.
Spot gold reached a peak of $1,134.30 an ounce, and was bid at $1,132.40 an ounce at 1539 GMT (3:39 p.m. British time), against $1,118.50 late in New York on Friday.
U.S. gold futures for December delivery on the COMEX division of the New York Mercantile Exchange rose $16.10 to $1,132.80. Earlier they hit a record high $1,134.90.
"Though technically charts are hovering in the overbought zone, the tipping point seems to be far off and short term correction or retracements should not be considered a sell-off," said Pradeep Unni, a senior analyst at Richcomm Global Services.
Further weakness in the dollar could fuel fresh buying of the precious metals, as funds turn to hard assets as an alternative to the U.S. currency.
The dollar index slipped as U.S. retail sales rose and traders saw discord over exchange rates among Asian and U.S. leaders as a cue to sell the U.S. unit against free-floating currencies such as the euro.
Rising equity markets also boosted the appeal of assets seen as higher risk, such as commodities and higher-yielding currencies. European shares touched a 13-month high in early afternoon trade, and U.S. stocks rose at the open. <.EU> <.N>
Among other commodities, oil rose nearly $2 a barrel, while base metals such as zinc and copper climbed.
GAINS SEEN
Gold now looks poised for further gains, analysts said, with a number of call options, or rights to buy, being placed at elevated levels on U.S. December gold futures.
"There is no reason why over the next few days it can't have a push towards that $1,200 mark before we get to the December expiry for the options positions, which everyone's looking at," said Tom Kendall, precious metals strategist at Mitsubishi Corp.
"There is a large bunch of $1,200 calls December expiry, which are acting as a bit of a magnet for prices at the moment."
Demand for physical gold remained relatively lacklustre, however, with holdings of the world's largest gold exchange-traded fund falling 0.61 tonnes on Friday.
Gold traders in India, the world's biggest bullion market last year, shied away from fresh buying on Monday as the metal hit record highs. More scrap is being returned to the market as prices rise, they said.
Gold's gains lifted other precious metals, with silver reaching its highest since July last year at $18.29. Platinum hit $1,429 an ounce, its highest since September 2008 and palladium reached its strongest level in 15 months at $372.50.
"For a long period of time, palladium had been regarded as undervalued relative to its sister metal platinum, but during the past weeks, this undervaluation has diminished to a large extent," Commerzbank said in a note.
"While platinum has also booked gains, reaching the mark of $1,400 an ounce for the first time in 14 months, it appreciated by just 10 percent during the past six weeks."
Later, platinum was at $1,427 an ounce against $1,390, while palladium was at $370 against $353.50. Rhodium hit a 13-month high at $2,375.
Silver was bid at $18.28 an ounce against $17.41.
For graphic of gold's rise to record highs, click on http://graphics.thomsonreuters.com/119/GLD/GLD_TMLN1009.html)
(Editing by Sue Thomas)
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