Gold rises to record above $1,060 on weak dollar

NEW YORK/LONDON (Reuters) - Gold rose to a fresh all-time high for a third straight day on Thursday as persistent dollar weakness increased bullion's appeal as a hedge against losses in dollar-denominated assets.

Gold also benefited as economic optimism prompted investors to buy assets perceived to be riskier -- everything from commodities to equities -- and to sell the safe-haven dollar and U.S. Treasury bonds.

Caesar Bryan, who manages $575 million in mutual fund assets at GAMCO Gold Fund in New York, said that gold prices should be supportive above the psychological $1,000-an-ounce level.

"Gold is not over-owned. People want to diversify their currency holdings into real assets," Bryan said.

Gold's gains also lifted other precious metals, with silver reaching its strongest level since July 2008 and palladium hitting a 13-month peak.

Spot gold hit a record high of $1,061.20, and was at $1,053.90 an ounce at 1:40 p.m. EDT against $1,043.70 late in New York on Wednesday.

Most-active December gold futures settled up $11.90, or 1.1 percent, at $1,056.30 an ounce on the COMEX division of the New York Mercantile Exchange.

Dollar weakness is still supporting gold. A softer U.S. currency makes the dollar-priced metal cheaper for holders of other currencies and boosts its appeal as an alternative asset.

"The market is nervous," said Afshin Nabavi, head of trading at MKS Finance. "Any big transaction seems to take the market with it momentarily. But overall, it is looking firm."

The dollar fell to a 14-month low against a basket of currencies on Thursday as rising equities markets fueled demand for riskier assets at the expense of the safe-haven U.S. currency.

From a technical perspective, gold is well-placed for further gains after ending two sessions above its previous record high just above $1,030 an ounce, analysts said.

Technical analysts at Barclays Capital said their outlook on gold was bullish, with a push toward $1,120 now on the cards.

ETFS SEE INFLOWS

Demand for gold-backed exchange-traded funds edged up after waning over the summer months, with the largest, New York's SPDR Gold Trust, reporting a fourth straight day of inflows on Tuesday.

Investors in the fund bought nearly 14 tonnes of gold, lifting its holdings 1.3 percent, in the week to Tuesday.

Among other precious metals, silver hit a 14-month high, lifted by gold's gains and also, as an industrial metal, benefiting from optimism over the global economic outlook.

Spot silver was at $17.77 an ounce against $17.55, having earlier touched a high of $17.92 an ounce.

Platinum and palladium, primarily used in autocatalyst production, also rose in gold's wake. Platinum was at $1,338 an ounce against $1,326, while palladium was at $319 against $311. Earlier it hit a 13-month high of $320.50.

Mitsubishi Corp precious metals strategist Tom Kendall said palladium had had a tendency to track gold in recent days.

Earlier this year the platinum to palladium price ratio reached 5.5 to 1, indicating that platinum was significantly overvalued relative to its cheaper sister metal, he said. Since then the ratio has narrowed to 4.2 to 1 today.

Kendall said this was partly due to expectations carmakers will push to substitute platinum for palladium in autocatalysts.

(Editing by Christian Wiessner)