* Dollar recovers from one-month low versus the euro
* Oil prices climb towards $83 a barrel
* South Africa slips to fourth place as world gold producer
(Updates prices, adds comment)
By Jan Harvey
LONDON, March 12 (Reuters) - Gold pared gains in Europe on
Friday as the dollar lifted from one-month lows versus the euro,
after better-than-expected U.S. retail sales data boosted
expectations the economy may be on the road to recovery.
The metal rose as high as $1,119.05 an ounce in earlier
trade as the dollar's decline helped it to recover from the
two-week low it hit in the previous session.
Spot gold <XAU=> was bid at $1,113.75 an ounce at 1356 GMT,
against $1,109.30 late in New York on Thursday. U.S. gold
futures for April delivery <GCJ0> on the COMEX division of the
New York Mercantile Exchange rose $5.30 to $1,113.50 an ounce.
"(The euro) was a bit stronger and is coming back a little
after the release of the retail sales data, but nevertheless we
are still up on the day, which should be supportive for gold,"
said Peter Fertig, a consultant at Quantitative Commodity
Research.
The euro pared earlier gains against the dollar after data
showed sales at U.S. retailers rose unexpectedly in February
despite a drop in vehicle purchases and harsh weather that had
been expected to curtail shopping. []
Gold typically moves in the opposite direction to the
dollar, as weakness in the U.S. unit boosts gold's appeal as an
alternative asset and makes dollar-priced commodities cheaper
for holders of other currencies.
From a technical perspective, gold has key support at $1,115
and $1,104, analysts said, as well as the psychologically
important $1,100 level at which it bounced on Thursday.
However, the technical picture overall remains neutral, they
added. "Only a close back above $1,131 would inspire renewed
calls for higher prices," said ScotiaMocatta in a note.
OIL CLIMBS
Oil rose towards $83 a barrel on Friday, poised for a second
consecutive weekly increase, amid expectations energy demand
would continue to grow despite any efforts by China to tighten
monetary policy further on rising inflation. []
Gold tends to track crude prices, as the metal can be bought
as a hedge against oil-led inflation.
Demand for the exchange-traded funds backed by the precious
metal was soft, with holdings of the world's largest gold ETF,
New York's SPDR Gold Trust <GLD>, unchanged on Thursday from a
day before. []
In supply news, South Africa's Chamber of Mines said the
republic's gold production fell by 5.8 percent in 2009, pushing
it to the fourth-biggest producer after China, Australia and the
United States. []
Among other precious metals, silver <XAG=> was bid at $17.20
an ounce against $17.16, tracking gains in gold.
The world's largest silver-backed ETF, the iShares Silver
Trust <SLV>, said its holdings fell 48.82 tonnes from the
previous day to 9,302.58 tonnes on Thursday. []
Elsewhere platinum <XPT=> hit a seven-week high $1,623.50 an
ounce and was later bid at $1,614 against $1,609.50, while
palladium <XPD=> was at $462.50 against $458.
The metals have performed well this year as investors expect
industrial demand from carmakers to improve and investment
buying to rise. They are also closely eyeing supply of metals.
Among the minor precious metals, iridium <IRID-LON> rose to
a 12-year high on Friday, with traders reporting strong Asian
demand for the metal used in chemicals processing and
manufacturing electronics components. []
"There seem to be many enquiries from Asian countries," said
one trader of the minor metal.
(Editing by Keiron Henderson)
