Gold held firm above $800 an ounce on Thursday as oil prices soared, but prices were locked into narrow ranges as a firmer dollar dulled the metal's attraction for non-U.S. investors.

Spot gold rose to $804.50/805.20 per ounce by 6:10 a.m. EST, compared with $803.70/804.40 late in New York on Wednesday.

Crude oil jumped more than $4 towards $95 a barrel, enhancing gold's role as a hedge against inflation, but bullion prices were restrained as the dollar rose versus the euro -- making dollar-priced gold more expensive for non-U.S. investors.

Gold looks like it's in a $790-$808 range for now, although expect wide ranges ahead of year end as liquidity in all markets is trading at a premium, said Simon Weeks, director of precious metals trading at Bank of Nova Scotia.

Gold prices have been increasingly volatile recently, having stalled twice in attempting to reach early November's 28-year peak of $845.40.

Analysts said that sharp moves either way could not be ruled out, with a further correction from the highs or a fresh attempt on November's peak both possible.

Further pockets of long liquidation are to be expected in the coming sessions, with month-end at the end of the week and year-end approaching, said James Moore of in a note to clients.

However the backdrop of dollar weakness, high energy costs and worries about the credit sector are still favorable for gold and will continue to draw investment demand into the market.

Investors will look to U.S. jobs and homes sales data later on Thursday for further clues on the health of the economy and on prospects for further interest rate cuts.


In other bullion markets, Japanese gold futures rose as a weaker yen and solid cash gold encouraged buying. The October 2008 gold contract on the Tokyo Commodity Exchange ended 42 yen per gram higher at 2,879 yen.

The COMEX December gold futures contract was trading up $4.90 an ounce at $805.20.

Bullion prices also seemed to be winning the case for wider investment with bullion holdings in StreetTRACKS Gold Shares, which accounts for more than 80 percent of all such funds in the world, surging to a record 609.33 tonnes on Wednesday.

In other precious metals, platinum rose to $1,443/1,447 per ounce from $1,436/1,440 in New York.

Dealers and analysts said supply worries were still providing residual support with an expected strike over safety in South Africa on December 4, although much of the impact had been factored into prices.

Palladium was marginally higher at $345/349 an ounce from $344/348 late in New York on Wednesday while silver eased to $14.39/14.44 an ounce from $14.40/14.45 an ounce.

(Additional reporting by Lewa Pardomuan in Singapore)