(Updates with quotes, prices)
By Atul Prakash
LONDON, April 15 (Reuters) - Gold pared gains after rising
1.2 percent on Tuesday as the dollar's rise after key U.S. data
prompted bullion investors to trim trading positions, but record
high oil prices underpinned the market.
The metal <XAU=>, seen as a hedge against oil-led inflation
and an alternative investment to the U.S. currency, climbed to a
high of $936.50 an ounce and was quoted at $932.50/933.50 at
1307 GMT, against $925.30/926.10 late in New York on Monday.
"Oil is clearly a factor. Technically also, gold looks
better because it broke through a weak trend line resistance,"
said Michael Jansen, analyst at J.P. Morgan Securities.
"But I think we will continue to consolidate. The recovery
from under $900 is not hugely convincing and there are still
concerns that the physical market is very subdued. Overall, we
will tend to trade in the $900-$950 range for a bit longer."
Oil set new record highs above $113 a barrel, with U.S.
crude touching a record high of $113.66. It is up about 18
percent from the start of the year and is averaging near $100.
But gains in bullion prices were limited as the dollar rose
after data showed a bigger-than-expected rise in U.S. producer
prices last month, suggesting the Federal Reserve may not have
to keep cutting interest rates quite so aggressively.
A firmer dollar makes gold costlier for holders of other
currencies and often lowers bullion demand.
"We expect the next target to be around $950. Still, it
might take a bit of time to reach that level. The market remains
shy after the recent price correction," Frederic Panizzutti,
metals analyst at MKS Finance, said.
Gold slipped to a two-month low of $872.90 an ounce in early
April after hitting a record high of $1,030.80 on March 17 in a
broad commodities sell-off, triggered by a rise in the dollar
and some weakness in oil prices.
TECHNICAL RESISTANCE
Analysts said gold may hover in a range in the near term,
but had potential to substantially gain in the long run.
"Gold still has to overcome strong technical resistance,"
said James Moore, precious metals analyst at TheBullionDesk.com.
"But given the ongoing recessionary/inflationary fears and
liquidity issues dogging the credit market, we remain bullish in
the mid- to longer-term and expect gold to reclaim $1,000 later
in the year," he said in a market report.
Investors awaited the U.S. March consumer price index on
Wednesday for the dollar's direction, which may affect gold.
In the physical sector, purchases from India, the world's
largest gold consumer, kept the physical market alive during the
wedding season, but wild swings in bullion prices crimped demand
in other parts of Asia. []
In other markets, U.S. gold futures for June delivery <GCM8>
rose $3.00 an ounce to $931.70 an ounce.
Spot platinum <XPT=> rose to a high of $2,000 an ounce and
was last quoted at $1,962/1,992, against $1,958/1,968 in New
York. Silver <XAG=> was down 7 cents at $17.71/17.76 an ounce,
and palladium <XPD=> fell $4 to $455/460 an ounce.
(Additional reporting by Alastair Sharp in London; editing by
Peter Blackburn)
