(Recasts, updates with closing prices, quotes, market
activity, adds NEW YORK to dateline)
By Frank Tang and Karl Plume
NEW YORK/LONDON, May 30 (Reuters) - Gold ended more than 1
percent higher on Friday after hitting a two-week low, as a
weaker dollar, oil gains and sharp declines in bullion prices
in past sessions attracted investors and bargain hunters.
Other precious metals largely followed suit, with spot
platinum <XPT=> and palladium <XPD=> recovering from three-week
lows and silver <XAG=> bouncing back from a four-week trough.
Spot gold <XAU=> rose as high as $889.60 an ounce and was
at $885.95/887.55 by New York's last quote at 2:15 p.m. EDT
(1815 GMT), against $877.85/879.25 late in New York on
Thursday. It fell about 6 percent this week to a low of $870 on
Friday, its lowest point since May 15.
"The stance of the market appears to be positioning itself
to the downside after three days of selling. We are looking at
today's strength as a technical bounce and consolidation," said
Ralph Preston, futures analyst at HeritageWestFutures.com in
San Diego.
Preston said that gold had broken key support levels at
$890 an ounce this week.
The active U.S. August gold contract <GCQ8> on COMEX
division of New York Mercantile Exchange settled up $9.80, or
1.1 percent, at $891.50 an ounce.
"We saw a good amount of support at these levels about a
week-and-a-half ago and there was a bounce off of that," said
Merrill Lynch metals strategist Daniel Hynes, referring to a
price level of around $885.
The dollar fell to session lows versus the euro as
investors took profits ahead of the weekend after recent strong
gains in the U.S. currency.
A weaker dollar makes gold cheaper for holders of other
currencies and often lifts bullion demand. The metal is also
generally seen as a hedge against oil-led inflation.
Oil climbed back above $127 a barrel on Friday, recovering
from earlier losses triggered by a U.S. regulatory probe.
[] U.S. crude futures <CLc1> ended up 73 cents at
$127.35 a barrel.
Physical demand for gold has slowed near the high prices
struck last week and demand may not improve significantly
unless buyers are convinced that prices are poised to climb
again, analysts said.
The third quarter is normally a slow demand period for
gold.
"Physical demand has almost dried up in key markets like
India, due to lack of any major festivals in the near term,"
analysts with Vision Commodities Services said in a note.
PLATINUM REBOUNDS
Platinum ended higher after touching a low of $1,946 an
ounce, the lowest level since May 8. It had fallen more than 10
percent from last week's 2-1/2 month high above $2,200 an ounce
despite a continuing power crisis in top producer South
Africa.
The head of state-owned electricity utility Eskom, which
produces about 95 percent of South Africa's electricity, warned
on Thursday that a power shortage which has slowed growth would
go on for years. []
"Platinum is undervalued at these levels as it's been
dragged down by the sell-off across the metals complex as a
whole. It will remain the one to rally quickly once this wave
of selling eases off," said Hynes of Merrill Lynch.
Spot platinum was last at $1,997.50/2,017.50 an ounce,
compared with $1,990.50/2,010.50 in late trade on Thursday. But
silver <XAG=> was down at $16.82/16.92 an ounce, versus its
Thursday close of $16.86/16.92. Palladium was up $4 at
$431.50/439.50 an ounce.
