By Atul Prakash
LONDON, March 11 (Reuters) - Gold rose more than 1 percent
in Europe on Tuesday, supported by a sharp decline in the dollar
against the euro and record high oil prices, analysts said.
Platinum jumped about 4 percent on speculative buying before
paring gains, while silver gained more than 2 percent to trade
above $20 an ounce.
Gold <XAU=> rose as high as $985 an ounce and was quoted at
$982.30/983.20 at 1109 GMT, against $974.10/974.90 late in New
York on Monday. It hit a record high of $991.90 on March 6.
"Everything here is good for gold. We need to move there
($1,000) very quickly or the market might lose some upside
momentum," said Frederic Panizzutti, analyst at MKS Finance.
"We have been battling here for quite a while now and if you
don't manage to see a prompt move towards $1,000, we might see
the market losing further momentum," he added.
The euro <EUR=> rose sharply to session highs above $1.54,
proving resilient to comments on Monday from European Central
Bank president Jean-Claude Trichet who expressed concern about
excessive exchange rate moves.
Speculation that the Fed might lower interest rates from the
current 3 percent before its scheduled meeting on March 18 is
expected to induce further dollar selling. []
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 prices rose to a record high for the fifth day in a row,
boosted by investor flows into oil and other commodities, partly
to hedge against inflation and the weak dollar.
"With persistent problems in the U.S. economy, rising crude
oil prices and fund investors chasing the metal, it's easy to
discern that gold is headed higher in the coming sessions," said
Pradeep Unni, analyst at Vision Commodities.
"But it is also crucial to remember that this over-extended
bull market is not devoid of a near term pull-back. In times of
sharp rally, markets have a tendency to slide on their own
weight, when the selling gets triggered."
STRUGGLES TO RETAIN UPTREND
Gold has struggled to sustain the uptrend after a failure to
break through the $1,000 barrier last week. It has risen as much
as 19 percent in 2008, driven by record high oil and
expectations of further rate cuts in the United States.
In industry news, the World Gold Council chief executive
James Burton said the organisation was looking to cross-list its
New York-listed StreetTRACKS Gold Shares <GLD.P> fund in Japan
and Hong Kong by September.
Spot platinum <XPT=> hit a high of $2,060 an ounce and was
last quoted at $2,025/2,035, against $1,980/1,990 late in New
York on Monday, when it tumbled to a 4-week low at $1,926 on
news that miners in South Africa would get more power supply.
Supply concerns triggered by mining disruptions in South
Africa, the world's top producer, lifted platinum to a record
high of $2,290 on March 4. The metal, used in auto catalysts and
jewellery, has risen as much as 50 percent in 2008.
"Platinum remains very volatile. On the one hand, we have
positive news about the power supply and on the other, we have
some production cuts, which are going to further imbalance the
supply demand this year," said Panizzutti said.
South African power utility Eskom is in the process of
restoring power to 95 percent of normal levels to the mining
industry. []
Analysts say the global platinum deficit could widen to
500,000 to 600,000 ounces by the end of 2008, compared with
about 265,000 ounces in 2007. The market had a surplus of 65,000
ounces in 2006, following seven successive years of deficits.
Silver <XAG=> rose to $20.10/20.15 from $19.64/19.69 an
ounce, while palladium <XPD=> was up at $480/485 an ounce,
against $467/472 in the U.S. market.
(Reporting by Atul Prakash; editing by Chris Johnson)
