PRECIOUS-Momentum ushers gold above $1,000/oz

* Spot gold rallies above $1,000/oz, highest since March '08

* Technical momentum, options activity drive buyers

* Analysts question sustainability of the rally

* SPDR Gold holdings XAUEXT-NYS-TT steady

By Humeyra Pamuk and Veronica Brown

LONDON, Sept 8 (Reuters) - Gold powered through the $1,000
per ounce psychological barrier on Tuesday, carried by a wave of
pent-up technical momentum and dollar weakness, with some
analysts eyeing last year's record high at $1,030.80.

Some investors were also seeing the spike in gold as a
warning signal to stock market bulls and were fretting about the
result of central banks and governments pumping billions of
dollars into banking systems to boost growth.

Spot gold XAU= rose to $1,007.45 an ounce, its highest
since March 2008, when bullion touched the $1,030.80 record. It
was trading at $1,001.75 an ounce by 1442 GMT, after briefly
dipping below $1,000, and versus $993.85 an ounce late in New
York on Monday.

U.S. gold futures for December delivery GCZ9 rose to
$1,009.4 an ounce, before easing to $1,006.80 an ounce, versus
Friday's close at $996.70 an ounce before the U.S. long weekend.

"Gold's probably the most technically traded financial
instrument in the world," analyst David Thurtell at Citigroup in
London.

"Where can it go? If it closes through $1,010 and plus
tonight, you'd have to think there would be a lot of very
nervous shorts around that are getting close to covering, and
then it really could pop and go up another $50 quite quickly,"
For a technical story on gold, see [ID:nL315353] and for a
snap analysis on gold's price prospects, see [ID:nL8574319]

But the sustainability of the precious metal's rally above
$1,000 an ounce, which also helped boost palladium and silver to
2009 highs, was in question.

UBS analyst John Reade said in a note to clients that gold
options had moved sharply after breaking through $1,000.

"Today's move in implied volatility suggests...that a
scramble for upside gold options could lead the spot gold price
higher," he said.

"We are unconvinced that all the ingredients are in place
for a sustained surge higher in gold," he added.

Implied volatility is a measure of demand for options, which
investors use to take advantage of, or protect themselves
against, sharp movements in spot rates.

Spot gold has now made three attempts to rise and stay above
$1,000, including Tuesday's push. The market stayed above the
key level for one day in February this year and three days in
record-setting March 2008.

SUSTAINABLE?

Despite gold hitting $1,000, it is far from an
inflation-adjusted record, which analysts at GFMS have put as
high as $2,079 per ounce.

Some analysts have said the higher gold price reflects
uncertainty across markets about how central banks will untangle
themselves from fiscal stimulus aimed at reviving economic
growth, as well as dollar weakness.

"Gold is celebrating because the day when inflation might
return is getting sooner rather than later," Ashok Shah, chief
investment officer at London and Capital.

"As long as the authorities are intent on not reversing
their policies then gold will remain in demand and it will be
wanted."

Investment action took a break, with holdings in the world's
largest gold-backed exchange-traded fund, the SPDR Gold Trust
(GLD), standing at 1,077.63 tonnes as of Sept. 7, unchanged from
Friday, denting the price prospects for gold. [GOL/SPDR]

"We are still sceptical that this is a sustainable rally,"
said Andrey Kryuchenkov, an analyst at VTB Capital.

"There is very little reason to be long gold, with already
record spec long positions accumulated in the market."

In other metals, silver hit a 13-month high of $16.81 an
ounce and was at $16.69 an ounce versus $16.29 an ounce.
Palladium XPD= touched $296.50 an ounce, its highest since
September last year. It was last at $294.00 an ounce versus
Monday's $291.50.

Platinum XPT= was at $1,283.50 an ounce versus $1,255.00
an ounce on Monday.

For a graphic on gold futures versus the S&P index click on:
here

(Additional reporting by Chikako Mogi in Tokyo; editing by
Keiron Henderson)