LONDON, Dec 31: Gold eased on Wednesday as oil prices softened in thin trade ahead of the New Year break, but is set to be one of the only commodities to post a gain year on year, supported by interest in bullion as a haven from risk.

Spot gold was quoted at $867.30/869.30 an ounce at 1029 GMT, down from $872.10 an ounce late in New York on Tuesday.

Precious metal investors should maintain a cautious investment strategy throughout the day - especially given that no major economic data releases are due today, which might leave technical momentum signals in the driving seat. Weakening oil prices dent gold’s appeal as an inflation hedge. Oil slipped more than 3 per cent to below $38 a barrel as fears over the effect of the economic slowdown on demand spooked investors.

The other main external driver of gold, the dollar, steadied against the euro, reversing earlier losses, and was on track to post its first annual rise versus the single currency in three years.

Given the shortened sessions today, trade is likely to remain in a rangebound mood, said James Moore, an analyst at TheBullionDesk.com.

Gold is one of the few commodities likely to post a slight gain on the year. Oil has tumbled 60 per cent in 2009, while base metals look set to post their worst year on record.

The other precious metals, which are primarily used in industry, look set to post losses year-on-year, however.

Silver ended last year at $14.77 an ounce, but softened a touch on Wednesday in line with gold to $10.86/10.94 an ounce from $10.91.

Platinum fell to $908/913 an ounce from $914.50, while palladium eased to $181.50/184.50 from $183. Platinum prices look set to fall sharply on the year, having closed 2007 at $1,520 an ounce, according to Reuters data.

The metal has been knocked sharply lower this year by the economic slowdown, which has curbed demand for cars. The automotive sector is responsible for around half of global platinum demand.—Reuters