December 22, 2008 at 6:38 AM EST
LONDON — Gold climbed more than 1 per cent in thin trade on Monday, as the U.S. dollar lost ground against the euro while oil's fall capped gains, traders and analysts said.
Trading volume was light, traders said, with many market players leaving for the Christmas holiday.
Spot gold was fetching $845.70 (U.S.) an ounce at 0739 GMT, recoiling from a peak of $849.70 and versus $837.60 an ounce late in New York on Friday.
“(Gold) it has bounced a little bit today as the euro/dollar is higher,” said Jesper Dannesboe, senior commodity strategist at Societe Generale.
The euro rose, recovering against the dollar in holiday-thinned trade, while the yen fell after the U.S. bailout plan for automakers quelled some extreme risk aversion.
Bullion touched a two-month high of $881.20 an ounce last week, but dropped nearly 3 per cent on Friday as the dollar charged higher against the euro, making the metal more expensive for local currency holders.
More gloomy news on the global economy is expected this week – starting with revised U.S. third-quarter GDP on Tuesday and November U.S. personal spending on Wednesday – pointing to a long recession ahead that could also bolster bullion buying.
“It looks likely that most commodity prices will be under pressure generally in the next few weeks and I can't see gold rallying from already high levels,” Mr. Dannesboe said.
China, the world's top consumer for many commodities, cut banks' benchmark lending and deposit rates again, the fifth cut since mid-September.
Oil fell below $43 a barrel on Monday, giving up earlier gains which were partly inspired by a weak U.S. dollar and comments from Saudi Arabia that OPEC supply cuts will succeed in stabilizing the market.
“Crude was up earlier, now under pressure – which is not good for gold,” a London-based gold trader said.
COMEX gold futures for February delivery were up 0.96 per cent to $845.50 per ounce, also retracing from earlier highs in step with spot metal.
Spot platinum was at $856.50 an ounce versus $847.00 an ounce while spot palladium was steady at $176.00 an ounce from $174.00 and silver climbed to $10.93 an ounce from $10.81.
Russia, a major supplier of platinum group metals (PGMs) used in industries ranging from car-making to jewellery, may face delays in exports next year due to red tape, the former monopoly export agency said.
