RTRS: Gold eases on dollar but eyes hefty monthly gain
By Jan Harvey
LONDON (Reuters) - Gold edged down on Friday as the dollar firmed against the euro, but trading was quiet as investors awaited the outcome of OPEC's production meeting this weekend and a spate of data due next week for fresh impetus.
Spot gold was quoted at $810.00/812.50 an ounce at 8:10 a.m. EST, down from $814.60 an ounce late on Thursday, as the firmer dollar dented interest in the metal as a currency hedge.
The euro slipped after data showed falling inflation in the euro zone, boosting expectations the European Central Bank will cut interest rates further.
Falling oil prices are also doing little to help gold, which typically moves in line with crude. Traders are awaiting the outcome of this weekend's meeting of the OPEC oil cartel, at which production cuts will be discussed.
"Obviously there is still a correlation between oil and gold," Wolfgang Wrzesniok-Rossbach, head of sales at Heraeus, said. "If OPEC make a decision which might drive the oil price up, that would also be positive for gold."
Despite the gold price dip, the precious metal is heading for its biggest monthly gain in nine years as investors spooked by the outlook for the global economy buy into the metal as a haven.
Prices have climbed some $90 an ounce, or 12 percent, this month. Gold is also up 12 percent in euro terms, and 15 percent in terms of the Australian dollar.
"Investment (in gold) is strong because there is huge concern over the economic and financial environment, both in the short and possibly the longer term," RBS Global Banking & Markets metals strategist Stephen Briggs said.
"The measures being taken to stabilize the situation may lead to inflationary fears down the road, so gold has a double benefit from that."
Gold is typically seen as a hedge against inflation.
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Traders will also be watching for a raft of economic data due out next week, which could have a significant impact on the dollar. U.S. auto sales are due out on Tuesday, and U.S. non-farm payrolls on Friday.
"Next week, manufacturing indices for all major economies will be released," Standard Bank analyst Walter de Wet said. "This should indicate the speed at which manufacturing is contracting globally."
Dresdner Kleinwort said on Friday it expects gold prices to average $870 an ounce this year, falling to $740 an ounce in 2009. For silver, it forecasts an average price of $15 an ounce in 2008 and $9.75 next year.
But Wrzesniok-Rossbach at Heraeus said delegates at a forum on Thursday organized by the precious metals group expected gold prices to hit new highs next year.
"Consensus was that in the long run all the bailouts we are seeing, whether in the car industry, the banking industry or others ... will (create) inflation, and that would be positive for gold," he said.
Among other precious metals, spot platinum was quoted at $860.50/880.50 an ounce, slightly up from $853 late on Thursday. Palladium was at $184/192 an ounce against $187.50.
Silver was at $10.12/10.20 an ounce against $10.31 an ounce.
The industrial precious metals have suffered more from the economic downturn than gold, with platinum and palladium, which are chiefly used in catalytic converters, both dropping significantly from their summer highs.
