Gold climbs to record high

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LONDON (Reuters) -- Gold recovered earlier losses and rose to a fresh record high Friday with the momentum which has lifted prices more than 9% this month after reports of central bank gold buying.

U.S. gold futures for December delivery on the COMEX division of the New York Mercantile Exchange rose $6.60 to settle at an all-time high of $1,148.50. The precious metal fell to a low of $1,137.00 earlier in the session.

India's acquisition of 200 tonnes of bullion from the IMF boosted interest in gold earlier this month. The impetus from the move pushed gold through key technical resistance levels, taking gold to a record $1,152.75 an ounce on Wednesday.

The metal may be due a correction after this month's sharp price rise, analysts said, but in the longer term it is likely to resume its climb.

"The perception is very positive now because of central banks buying gold, but they are buying it off the market. It doesn't change global holdings of the central banks," said Wolfgang Wrzesniok-Rossbach, head of sales at Heraeus.

"It gives some support, but I think gold has moved too much in too short a period of time.

"That said, it doesn't mean there is not an underlying uptrend," he added. "It is there, and it is intact even if gold falls to $1,075 or $1,025."

Prices are being capped by strength in the dollar index which firmed 0.48% on Friday as investors shed riskier investments. European shares fell for a fourth session, and U.S. stocks declined.

Strength in the U.S. unit weighs on gold, as it cuts its appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.

"The dollar index is hovering above the 75 zone and that strength is keeping the lid on gains," said Pradeep Unni, senior analyst at Richcomm Global Services.

"At the moment it looks like gold is awaiting the next big clue for a further push beyond $1,154, as current fundamentals seem to have been totally factored into the price."

Analysts said gold was likely to take support from interest in the metal as a hedge against inflation, which some fear will hit the markets longer term as a result of money flooding into economies via quantitative easing.

Andrew Cole, manager of the Baring Multi Asset Fund, told Reuters on Thursday that gold could hit new highs this year and next as investors look for an inflation hedge.

Though some analysts have said such buying of gold is premature, JPMorgan commented that "with respect to golden portfolio protection; remember the time to purchase insurance is before your house catches fire."

Silver was at $18.28 an ounce against $18.51. Metals consultancy GFMS said on Thursday the metal may rise above $20 an ounce as surging investment more than offsets a drop in fabrication demand.

Platinum was at $1,433.50 an ounce against $1,441.50, while palladium was at $360.50 against $366.

Fellow platinum group metal rhodium rose to a fresh 13-month high of $2,675 an ounce on Friday, lifted by speculative demand in anticipation of a bounce in car sales.

Ruthenium meanwhile jumped 23.5% to $105 an ounce, tracking gains in other platinum group metals this year, as investors sought out hard assets.

"The other platinum group metals have been moving very sharply, and ruthenium didn't move with them," said a minor metals trader. "There is a general flight of money into metal ... people feel paper is going to be worth less."