Gold steadied above $912 an ounce on Friday after rallying to its strongest level in a month the previous day on record oil prices and a weaker U.S. dollar that boosted the metal's safe-haven appeal.
Gold has risen nearly 7 percent since falling to its lowest level in nearly 6 weeks at $856.80 on June 12, with a weaker equities markets also encouraging funds to shift some of their money back to the precious metal.
Gold was at $912.30/913.20 an ounce, barely changed from $912.60/913.60 late in New York on Thursday, when it rallied to $917.20 an ounce -- its highest level since May 27.
Despite the gains, gold was still well below a lifetime high of $1,030.80 an ounce hit in March. Dealers noted buying interest from dealers in Singapore as well as light buying from Japanese investors.
We will try to consolidate above the $908 level. I'd expect gold to try the main resistance around $925, provided that oil stands at these high levels, said Louis Lok, a dealer at Bank of China in Hong Kong.
It may not easy for the U.S. dollar to try to fight back, he said.
Oil fell 59 cents to $139.06 a barrel on Friday, having hit a record high of $140.39 after Libya said it was studying possible options to cut output in response to potential U.S. actions against OPEC countries.
The euro was steady at $1.5754 after rising to a 3-week high around $1.5770 on Thursday. The dollar had dropped as investors reduced their expectations for a Federal Reserve rate hike this year, and as U.S. stocks tumbled.
In theory, rising energy prices boost gold's appeal as a hedge against inflation, while a weaker dollar makes the metal an attractive alternative investment.
I think there's an increasing view that the U.S. dollar in the near term might be in for some more weakness, said Mark Pervan, senior commodities analyst with ANZ in Melbourne.
I think at the moment it is sort of consolidating. It's watching what the dollar is doing. You can sort of sense that it could move towards $950 pretty quickly. But $930 is the next resistance level, I think, said Pervan.
Gold futures for August delivery on the COMEX division of the New York Mercantile Exchange fell $0.6 to $914.5 an ounce, having risen nearly 4 percent on Thursday.
Spot platinum rose to $2,070.00/2,080.00 an ounce from $2,057.50/2,077.50 late in New York. Spot palladium rose to $465.00/473.00 an ounce from $464.00/472.00 an ounce.
Silver dipped to $17.15/17.21 an ounce from $17.22/17.28 late in New York.
The most active Tokyo platinum contract for June 2009c delivery on the Tokyo Commodity Exchange ended the morning session 82 yen per gram higher at 7,020 yen
The contract hit an intraday high of 7,038 yen, its highest level since June 19, reflecting a firm cash market.
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