RTRS: Gold steady near two-month high on dollar, oil
SINGAPORE (Reuters) - Gold steadied around $818 an ounce on Friday, heading for its biggest weekly percentage gain in almost three months on recent dollar weakness and a surge in oil prices.
Gold has gained over 20 percent from a 13-month low around $680 an ounce in October, shrugging off weakness in other commodities as it is seen as a safe-haven in times of turmoil.
It has also benefited from technical buying after the precious metal regained $800 for the first time since early December.
"I think people are still happy to buy gold as safe-haven. We also heard the funds are short side," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings rose 4.28 tonnes to 762.17 tonnes of gold as of Dec 11.
"I think people are watching movements in the dollar. That's all," Leung, referring to a relatively quiet trade in Asia ahead of next week's U.S. Federal Reserve meeting on interest rates.
Gold was at $818.15 an ounce, down $0.20 from New York's notional close on Thursday, when it hit its highest since mid-October of $833.80 an ounce on a weaker dollar.
The euro slipped to $1.3318 against the dollar but dealers said the U.S. currency could face downward pressure on expectations of an interest rate cut by the Fed next week.
Oil slipped for the first time in three days on Friday, after jumping nearly $6 in the past two days as the OPEC president called for more "severe" production cuts at its meeting next week, a move which could potentially lift gold prices.
Fears of rising energy costs helped propel gold to a record of $1,030.80 in March before it slipped to track weaker oil, and recently due to a sell-off in equities, which forced investors to sell bullion to cover margin calls.
The Nikkei dropped 1.3 percent amid worries about the fate of the U.S. auto industry bailout plan.
"Actual demand is supporting gold prices," said Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo, referring to physical buying by retail investors.
"The basic tone in gold has changed a little bit, owing to a recovery in oil prices," said Sonoda, who pegged the upside target at the 175-day moving average around $850.
Investors were closely watching OPEC for any more signals on what some analysts perceive will be a further 1-2 million barrels per day output cut due at the group's meeting next week.
Platinum was trading at $823.50 an ounce, down $2.50 from New York's notional close, with sentiment weighed by uncertainty over the U.S. bailout plan. More than 60 percent of platinum use goes to autocatalysts to clean exhaust fumes.
Senate negotiators on Thursday night made progress toward a possible compromise in last-ditch talks to salvage a proposed $14 billion bailout of U.S. automakers. Continued...
