(Reuters) - Gold rallied to six-month highs on Thursday, ahead of a European Central Bank meeting that could outline the bank's plans to tackle the debt crisis and draw fresh investment in the bullion market.
The platinum price rose to a new five-month high, swept higher by a broad investor push into precious metals, while world number three producer Lonmin and several South African unions signed a peace deal aimed at ending a deadly three-week strike.
The ECB holds a policy meeting at which it is expected to leave the euro zone benchmark rate unchanged at 0.75 percent, but bank president Mario Draghi is under pressure to deliver the framework of a plan to buy sovereign bonds to contain indebted nations' borrowing costs and, by extension, the debt crisis.
Gold, which benefits from an environment of low interest rates and support for the euro that drives it up against the U.S. dollar, could make fresh highs if the ECB gives enough detail of its plans to salvage the single European currency.
Spot gold rose 1.0 percent to $1,709.54 an ounce by 0850 GMT, around its highest since March this year.
Gold priced in euros rose to a fresh peak for 2012 of 1,354.50 euros an ounce, its highest since September 12 last year, the day the price hit a record 1,373.92 euros.
Euro-gold was last up 0.8 percent on the day at 1,354.00 euros, while the single European currency traded near a two-month high against the dollar.
"There is a bit of buying the rumor here and whether we see any correction on the facts or not, we will have to wait and see," Tom Kendall, an analyst at Credit Suisse, said.
"What is clear is the break of $1,700 is going to pull in some additional momentum-following money. I think it will give further encouragement to those who are invested in physical (gold) and it is adding confidence to those who are already exposed...so this could be sustained," he said.
Draghi is expected to flesh out enough details of the plan to back up the promise he made in late July to do "whatever it takes" to preserve the euro. The governing council began meeting at 0700 GMT on Thursday.
CHANCES OF CUT UNCLEAR
A Reuters poll on August 29 showed economists were split on the chances of the ECB delivering a 25-basis point cut to its main refinancing rate and 48 out of 62 surveyed said they did not expect the bank to set an upper limit on the yields on the government bonds of Spain and Italy, two of the countries in the firing line of the markets for their tenuous public finances.
"For gold, a boost from the rate cut needs to be weighed against a softer euro and dampened risk appetite," Edel Tully, a strategist at UBS, said.
"Gold will likely react strongest when the market gets over its initial disappointment on the lack of details from Draghi and once the focus turns to impending bond intervention and balance sheet expansion, this will be supportive of a higher gold price, especially (euro/gold)."
Just as important for the near-term direction of the gold price will be Friday's monthly data release on U.S. unemployment.
A Reuters survey offers a forecast for an increase of 125,000 works on non-farm payrolls.
Evidence of strength in the economic recovery will be crucial in determining whether Federal Reserve policymakers will signal next week that they will use bond purchases to lower interest rates, thereby benefitting gold, to foster growth.
Elsewhere, Lonmin and unions representing mineworkers at the strike-hit Marikana platinum mine in South Africa have signed an accord for a return to work, but a militant breakaway union was not part of the deal, union officials said on Thursday.
On Wednesday, more than 3,000 striking miners marched through streets near the mine, the largest protest at the hot spot since police shot dead 34 of their colleagues last month.
Platinum is trading around its highest in nearly five months after the strike paralysed production at Lonmin's South African operations three weeks ago.
In that time, platinum has gained more than 15 percent in value and now shows a gain for 2012 of 14 percent.
Palladium was up 1.1 percent at $646.72 an ounce.
Silver, which has gained nearly 4 percent since the start of the month, was up by 2.1 percent on the day at a 5-1/2 month high of $32.94 an ounce.
The gold/silver ratio, or the number of ounces of silver needed to buy one ounce of gold, fell below 52.0, its lowest since late April, highlighting silver's outperformance against gold. The ratio was closer to 60.0 just a month ago.
