(Recasts, adds quotes, changes prices, pvs SINGAPORE)
By Atul Prakash
LONDON, April 7 (Reuters) - Gold rose more than 1 percent on
Monday as firm oil prices and positive market sentiment prompted
investment in the metal, a traditional hedge against inflation.
Silver tracked gold, while platinum rose on persistent
worries about output in main producer South Africa, which
accounts for 80 percent of the world's supply.
Gold <XAU=> rose as high as $918.70 an ounce and was quoted
at $917.60/918.50 at 1033 GMT, against $908.40/909.20 late in
New York on Friday. But the metal is still 10 percent below a
record high of $1,030.80 hit on March 17.
"Gold is reacting to a rise in oil prices and the dollar is
on a weak footing. The gold market is not as long as it could be
given the recent precipitous decline in the COMEX net
speculative long position to 19.3 million ounces," said David
Holmes, director of metals sales at Dresdner Kleinwort.
"There's still some institutional investment demand around,
reflected by the steady growth in gold ETF assets which now
exceed 30 million ounces," Holmes said, referring to exchange
traded funds.
Oil rose above $107 a barrel, continuing last week's late
rally after OPEC's secretary-general reiterated the group saw
little need to pump more oil.
But the dollar marginally gained, joining buoyant equity and
credit markets in shrugging off last week's soft U.S. jobs data
as investors took heart from central bank efforts to alleviate
the global credit crunch.
Gold often moves in the opposite direction of the dollar.
The gold market has also been witnessing buying from
jewellers at price dips, helping the metal rebound from a
two-month low of $872.90 an ounce touched last week.
"Gold prices remain reasonably stable, with jewellers buying
on price dips," Fairfax investment bank said in a report.
"Longer term, investors remain positive about the metal and
further dollar weakness could quickly result in gold prices
resuming their upward trend."
In other bullion markets, U.S. gold futures for June
delivery <GCM8> rose $8.1 an ounce to $921.30 an ounce.
IMF MEETING AWAITED
The bullion market will keep an eye on the International
Monetary Fund's meeting on Monday to consider revamping the
institution's more than 60-year-old income model and raise money
through the sale of a limited portion of IMF gold stocks.
The IMF holds 103.4 million ounces of gold. As of February
20, they were worth $95.2 billion. A panel led by Andrew
Crockett, president of JP Morgan Chase, has recommended the sale
of about 12.9 million ounces, or 400 tonnes, of the gold to
close a projected income gap of $400 million by 2010.
The IMF board cannot take a decision on Monday to begin the
sale until the United States Congress has approved the move.
In other markets, spot platinum <XPT=> rose to $2,025/2,035
an ounce from $2,005/2,015 late in New York on Friday on supply
problems in South Africa, where a power shortage had disrupted
mining and sent prices to a record high at $2,290 on March 4.
Implats, the world's second-biggest platinum producer, said
South Africa did not boost its power allotment to 95 percent
from 90 percent. []
Silver <XAG=> rose to $17.94/17.99 from $17.77/17.82 an
ounce. Spot palladium <XPD=> rose to $452/458 an ounce from
$436/440 an ounce in New York.
(Additional reporting by Anna Ringstrom in London and Lesley
Wroughton in Washington)
(Reporting by Atul Prakash; editing by Chris Johnson)
