Gold, platinum near historic highs; uptrend intact

LONDON (Reuters) - Gold prices rose towards historic highs on Tuesday as the dollar stayed weak on expectations of a half-percentage-point cut in U.S. interest rates.

The market looked ahead to a slew of U.S. bank results, which could intensify financial market uncertainty and influence the dollar. Any signs of further weakness in the U.S. currency might attract more investors into the precious metals market.

Other key metals also advanced, with platinum near record highs and silver keeping within sight of a 27-year peak hit on Monday. Palladium eased but was near a two-month high.

"Markets don't go in a straight line so I wouldn't be surprised to see some pullback, but medium term I am still very friendly to the gold market," said Jeremy East, head of metals trading at Standard Chartered Bank.

"There is now a lot of expectation in the market of a dramatic interest rate cut. The other supporting factor that we have seen continuing is bad news for the banks. We are going to see a number of results coming out from financial institutions and the market would be watching them very carefully."

Spot gold rose as high as $910.70 an ounce and was at $904.75/905.45 by 6:03 a.m. EST. Bullion closed at $902.10/902.80 in New York late on Monday, when it hit an alltime high of $914 on investor buying, driven by the dollar's slide.

U.S. gold futures hovered near record highs. The most active February contract gained $2.6 an ounce to $906.10.

Gold's appeal as an alternative investment is increasing as the dollar comes under pressure on concerns that some of the largest U.S. banks will report weaker earnings this week.

The dollar was steady against the euro, but was not far from a record low hit last year, with the market expecting that U.S. retail sales data and banking results could boost the case for aggressive, growth-boosting interest rate cuts.

Citigroup Inc (C.N) is the first big bank this week to report fourth-quarter earnings and the spotlight will be on how much the credit crisis is damaging banks' bottom lines and increasing the risk of a recession.

"We continue to see decent buying even at these record high prices. But the market remains nervous with no one willing to enter into short positions or willing to call the turning point -- something that supports prices at least for now," Standard Bank said in a report.

RECORD HIGH ETF

Investors continued to park their money in exchange-traded funds, backed by physical metals.

Gold held in New York-listed StreetTRACKS Gold Shares GLD.N, the world's largest gold-backed ETF, rose to a record high of 652.56 tonnes on Monday.

London-based ETF Securities said in a statement its precious metal ETFs had accumulated over $1.1 billion since April 2007. In the past 6 weeks, they added $260 million, shared equally amongst platinum, silver, gold and a precious metals basket.

In the physical sector, consumers in India, turned their backs on jewellery shops as gold hit record high, but others showed more resilience with dealers noting demand out of China and other parts of Asia.

India is the world's largest consumer of gold.

Platinum rose to $1,577/1,582 from $1,572/1,577 an ounce in New York on Monday, when it spiked to a record high of $1,590.50, tracking gold's rally.

"The outlook for the white metal is still extremely bullish, with the tight fundamental picture limiting price dips and the white metal should now look to challenge $1600/oz," James Moore, precious metals analyst at TheBullionDesk.com said in a note.

Silver rose to $16.36/16.41 from $16.31/16.36 an ounce, but off Monday's 27-year high of $16.58. Palladium fell to $377/382 an ounce from $379/384.

(Additional reporting by Lewa Pardomuan in Singapore and Biman Mukherji in New Delhi)

(Reporting by Atul Prakash; editing by Chris Johnson)