* Reuters
* Tuesday January 8 2008
(changes dateline, byline, adds quotes, updates prices PVS TOKYO)
By Veronica Brown
LONDON, Jan 8 (Reuters) - Gold surged to a record high above $875 per ounce on Tuesday as investors poured into the market, confident of further upside in the metal with support from a weaker dollar and firm oil.
Spot gold sprinted to a record $875.80 an ounce, surpassing the historic high of $869.05 hit last week.
By 1100 GMT, bullion stood at $872.70/873.40 an ounce, up roughly 1.5 percent from $859.70/860.40 quoted late in New York on Monday.
"There's extraordinary investor appetite for gold which seems relentless," SGCIB economist Stephen Briggs said.
"The buying just seems to go on and on and on."
Other bullion markets reflected the move in spot gold. The most active February COMEX gold futures contract was trading up $14.80, or 1.7 percent, at $876.80 from the New York settlement.
In Tokyo, the key December 2008 gold contract on the Tokyo Commodity Exchange (TOCOM) ended at 3,097 yen a gram, up 53 yen or 1.7 percent from Monday's close of 3,044 yen.
Traders said gold and other commodity prices had found support so far in January from fund re-allocation cash, with pension funds and other long-term investors having pumped an estimated more than $100 billion into commodities over the past five years.
But the stakes were being raised for a corrective sell-off as investors are holding large long positions already.
"There will be a correction after such a run...the market is very, very, long," Briggs said.
The Commodity Futures Trading Commission said in its latest Commitments of Traders report that the noncommercial net long position rose to 199,438 lots in the week up to Dec. 31, from 184,375 lots a week earlier..
WIDER INVESTMENT
Broader investment interest in gold remained solid moving into 2008, with gold held in New York-listed StreetTRACKS Gold Shares, the world's largest gold-backed ETF, rising to a record high of 639.35 tonnes by Jan 7.
"The steady influx of money to gold ETFs...and the large volume of shares in the big gold mines being traded are proof that there are still a large number of new investors attracted to this market, which should provide a support line for the price," Commerzbank analyst Eugen Weinberg said in a note to clients.
Fundamentals played in gold's favour with a weaker dollar versus the euro making the metal cheaper for non-U.S. investors, while firm oil highlighted its allure as a hedge against oil-led inflation.
Crude rebounded above $95 a barrel on Tuesday after falling 3 percent a day earlier as the potential of a recession in top fuel consumer the United States led investors to expect lower demand.
The euro was up 0.1 percent versus the dollar, holding above $1.47.
"All the normal fundamental reasons to be friendly to gold are still there so you have to go with the flow. The market seems to be building another head of steam and the buying this morning was quite heavy," a London-based trader said.
In other precious metals, platinum advanced in line with sharp gains in Japanese platinum futures. Key TOCOM platinum for the December delivery closed up 80 yen or 1.5 percent at 5,313 yen a gram.
Japanese platinum futures often set the trend for the cash price as TOCOM is the most liquid market for the white metal.
Spot platinum rose to $1,540/44 an ounce from $1,530/$1,534 quoted in New York late on Monday, closing in on last week's record $1,553.
Palladium rose to $373/375 an ounce from $365/$368 in New York on Monday, while silver rose to $15.45/15.50 an ounce from $15.12/15.17.
(Additional reporting by Chikafumi Hodo)
(Editing by Michael Roddy)
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