LONDON, Nov 28: Gold was steady in Europe on Friday in quiet trade after the US Thanksgiving holiday, with traders eyeing the outcome of an Opec meeting over the weekend.

Softer oil prices are weighing on the market a touch, although a stable dollar and a lack of buying interest due to the US holiday are keeping prices within a narrow range.

Spot gold was quoted at $812.40/814.40 an ounce little changed from $814.60 an ounce late on Thursday.

Traders will closely watch Opec’s informal meeting on Saturday in Cairo, where ministers will discuss a possible cut in production. A sharp move in the oil price could drag gold in its wake.

Obviously there is still a correlation between oil and gold, said Wolfgang Wrzesniok-Rossbach, head of sales at precious metals group Heraeus.

If Opec make a decision which might drive the oil price up, that would also be positive for gold. The precious metal tends to move in line with crude, both because it is bought as a hedge against oil-led inflation and because stronger oil prices tend to boost interest in commodities as an asset class.

The other main external driver of gold, the dollar, was steady against the euro, though it slipped against a basket of currencies.

In addition to the Opec meeting, traders will be watching for a raft of economic data due out next week, which could have a significant impact on the dollar.

Dresdner Kleinwort said on Friday it now 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.

Wrzesniok-Rossbach said delegates at a forum on Thursday organised by Heraeus expected gold prices to rise to new highs next year.

Wrzesniok-Rossbach said the outlook for platinum group metals and silver, which have more industrial uses, was less rosy as recession was expected to curb demand.

Spot platinum was quoted at $848.50/868.50 an ounce, slightly down from $853 an ounce late on Thursday. Palladium was at $185/193 an ounce against $187.50.

Among the other precious metals, silver was at $10.25/10.33 an ounce against $10.31 an ounce.—Reuters