June 03, 2008	Tuesday	Jamadi-ul-Awwal 28, 1429

LONDON, June 2: Gold prices climbed on Monday as investors took advantage of a slight fall in the dollar to snap up the metal, but weaker oil prices capped gains.

Investors awaited US economic data that is likely to affect the dollar and, in turn, precious metals.

Spot gold rose as high as $893.80 an ounce and was quoted at $892.00/892.50 at 0956 GMT,against $885.95/887.55 in New York late on Friday, when the metal closed 1 per cent higher after touching a two-week low.

As we approach the summer season, gold appears to be trading within contracting ranges and we could look forward to a repeat of last week’s choppy sideways action,” said David Holmes, director of precious metals sales at Dresdner Kleinwort.

Despite a pattern of lower highs and lower lows since March, the bullish story remains intact, he said, adding an absence of follow-through selling in Asia prompted investors to buy the metal.

Analysts said bullion investors would continue to track the dollar for short-term direction. The US currency slipped after trading 0.2 per cent higher against the euro, having struck a two-week high on Friday.

For now gold will remain vulnerable to oil/dollar-driven profit taking, and could potentially retest the recent lows around $845. However, given the recent round of risk reduction, we would expect investors to view sub-$900 gold favourably.

Investors will look to the Institute for Supply Management’s manufacturing index later in the day for a snapshot of the US factory sector.

The ISM index is expected to be 48.5 in May, little changed from 48.6 in the previous month and showing mild contraction in manufacturing.

In other bullion markets, gold futures for August delivery on the COMEX division of the New York Mercantile Exchange rose $2.1 an ounce to $893.60 an ounce in electronic trading.

Spot platinum rose to $1,992/2,012 an ounce from $1,987.50/2,007.50 in New York late on Friday. Silver was last at $16.85/16.91 an ounce, up from $16.80/16.86, while palladium rose 50 cents to $429.50/437.50.

In industry news, Aquarius Platinum said it lost 1,300 ounces in platinum group metals after workers at its Everest mine in South Africa downed tools in an illegal strike last week.—Reuters