LONDON — Gold gained 2 per cent on Friday, as the U.S. dollar weakened against the euro and oil prices climbed higher, while platinum rallied more than 6 per cent in erratic trade.
Gold rose to a session-high of $760 (U.S.) an ounce and was at $757.90 an ounce by 1105 GMT, versus $745.10 an ounce late in New York on Thursday.
Gold was 28 per cent below a lifetime high of $1,030.80 struck in March, which it has been unable to revisit after selling choked off recent rallies. It hit a two-month high of $931 in October but losses in equities forced investors to cash in to cover losses.
“Gold is tracking the movements in the dollar,” said analyst Michael Widmer at BNP Paribas, adding stronger oil prices have also helped gold to rise higher.
The euro climbed 0.6 per cent against the dollar to $1.2530 and the dollar index lost almost 1 per cent as a rebound in global stocks from the previous day's rout curbed investors' demand for the Japanese and U.S. currencies.
Gold tends to move in the opposite direction to the dollar, as a strong U.S. currency makes bullion more expensive for local currency holders.
Oil rose above $50 a barrel, rebounding from a three and half year low and buoyed by rallies in Europe and Asian equities on talk that China may cut interest rates later in the day.
The World Gold Council said investment demand rose 56 per cent to 382.1 tonnes for the third quarter of this year as heightened levels of economic and financial uncertainty stirred safe-haven buying.
The council said the global demand for gold was expected to be steady around 843 tonnes in the fourth quarter of 2008 on festive demand and buying from investors.
But analysts remained cautious.
“Prices have rallied strongly this morning as the dollar weakened,” said John Meyer, the head of resources at UK-based investment bank Fairfax. “We remain cautious near term and would not be surprised to see the metal pull back below $750 an ounce.”
Platinum jumped more than 6 per cent on bargain-hunting, after falling to a three-week low of $759 an ounce in Asian trade as weak demand from the auto industry continued to weigh on prices.
The metal, used mainly in autocatalysts to clean exhaust fumes, was trading at $791.50 an ounce, up from $762.50 an ounce in New York's on Thursday.
Honda Motor Co. said it would build fewer cars in Japan, Europe and North America to reflect an increasingly bleak outlook for sales as the global economic crisis discourages big-ticket purchases.
“The price falls could lead to some supply side responses, but overall people in the market are mainly concerned about the demand, which is relatively weak,” Mr. Widmer at BNP Paribas said.
New York gold futures rose $10.2 an ounce to $758.7.
Silver was at $9.18/9.26 from $8.95 and palladium at $177.50 from $173.
