LONDON, July 25: Gold rose on Friday as the dollar weakened and oil prices pared losses, while platinum and palladium firmed from 6-month lows on bargain hunting.
Spot gold was up at $931.00/932.00 an ounce at 1000 GMT from $923.00/924.00 late in New York on Thursday.
The gold market is reacting to the fact that oil is in consolidation-recovery mode and the dollar is no longer strengthening, David Holmes, Dresdner Kleinwort’s director of precious metals sales, said.
A stronger greenback usually pressures gold, which is often bought as an alternative investment to the US currency.
Oil prices rose slightly on Friday, finding some stability after two weeks of losses as buyers crept back into the market before the weekend. Gold typically moves in line with crude, as it is often bought as a hedge against oil-led inflation.
A Reuters survey of 40 analysts and traders published on Thursday showed a mid-range forecast of $930.00 an ounce for gold in 2008, 30 per cent above last year’s average price.
If the dollar was to resume weakening because of negative data coming out of the States -- which is definitely a possibility -- then that would be a positive for the whole commodity complex, and for gold in particular, Holmes said.
Platinum and palladium rose from six-month lows touched in the previous session when fears of weakening demand from car makers.
The metal has seen modest demand overnight and given background fundamentals we anticipate strong bargain hunter interest once prices stabilise, said TheBullionDesk.com analyst James Moore in a research note. Platinum prices in particular have slipped sharply in the past two weeks, and is currently trading nearly 25 per cent below its March record high of $2,290 an ounce.
Spot platinum was at $1,730.50/1,750.50 an ounce against $1,709.50.00/1,729.50 an ounce on Thursday. The metal touched $1,701.50 an ounce, its weakest level since January 31, on Thursday.
Spot palladium traded slightly higher at $384.00/392.00 against $382.00/390.00 late in New York. It dropped to an intraday low of $371.50, its weakest since January 25, on Thursday.
—Reuters