Gold hits 28-year peak, platinum near all-time high

By Frank Tang and Atul Prakash

NEW YORK/LONDON (Reuters) - Gold closed higher in New York on Monday despite a strengthening dollar and weaker crude oil, as U.S. stocks rallied while platinum rose to a near-record high on robust investment demand.

"Over last month or so, we've gone through periods when gold and stock prices were moving together. So, it's entirely possible that we are seeing another influence like that. That wouldn't be surprising at all," said Patrick Fearon, precious metals analyst of A.G. Edwards & Sons in St. Louis.

Gold fell in early sessions as the dollar rebounded and crude declined. But the metal recovered as the session went on. Most-active December gold on the COMEX division of the New York Mercantile Exchange settled up $4.10 at $754.10.

Spot gold rallied to $747.65 an ounce, its highest level since January 1980, before easing to $746.80/747.60 by 2:15 p.m. EDT (1815 GMT), against $742.40/743.20 late in New York on Friday.

The metal has hit new highs four times in less than two weeks.

U.S. stocks jumped, with both the blue-chip benchmark Dow Jones industrial average .DJI and broad-based Standard & Poor's 500 index .SPX up 1.5 percent.

Frank McGhee, head precious metals trader of Integrated Brokerage Services LLC in Chicago, said gold was undergoing consolidation early on Monday.

"The one potential negative is that there is not a lot of physical, industrial gold moving," McGhee said.

McGhee said investment demand has driven gold's strength.

"If we consolidate here for a bit, the cash (physical) market will catch up," he said.

In other bullion markets, August 2008 futures in Tokyo ended 28 yen per gram higher at 2,786 yen -- its loftiest level since 1985.

"With no signs of the dollar ending its slide against major currencies, bullishness is ample. But this does not exclude the market from a near-term pull back," Pradeep Unni, analyst at Vision Commodity Services in Dubai, said.

John Reade, head of metals strategy at UBS Investment Bank said that speculators on U.S. futures exchanges had heavily added long trading positions and any sign of liquidation from them could easily trigger profit taking in gold.

"Still, while the dollar remains weak and the credit crunch continues, further flows into gold could be seen. We continue to forecast gold at $750/oz in three months," he said in a note.

In news related to the official gold sector, Dominique Strauss-Kahn, the International Monetary Fund's future managing director, said central bankers do not appear to oppose sales of IMF gold. Strauss-Kahn was chosen last week to succeed Rodrigo Rato as IMF chief a month from now.