(Updates with quotes, prices)
By Atul Prakash
LONDON, April 7 (Reuters) - Gold jumped more than 2 percent
to a one-week high in late business on Monday, as bullion buying
gathered pace after oil climbed and the dollar pared gains.
But the metal, traditionally seen as a hedge against oil-led
inflation and an alternative investment to currencies, was seen
trading in a range in the near term after sharply falling from a
record high of $1,030.80 an ounce hit on March 17.
"The dollar has moved down since this afternoon and that has
put an upward pressure on gold prices. At the same time, oil
prices are also higher and supporting the market," said Michael
Widmer, metals analyst at Lehman Brothers.
"Most of the fundamental drivers are still in place, but we
see a phase of consolidation. We had gone up above $1,000 at a
quite rapid pace so it's hard to be as bullish in the short term
as we were a month ago."
Gold <XAU=> rose as high as $927.70 an ounce and was quoted
at $927.40/928.30 at 1501 GMT, against $908.40/909.20 late in
New York on Friday. But the metal is still 10 percent below its
record high..
Oil jumped nearly $3 a barrel, lifted by a rally in gas oil
as optimism that banks will manage to shore up the financial
system helped to fuel buying across commodities and equities.
The dollar pared gains after rising on stable equity and
credit markets that raised optimism that the worst of the
financial crisis might be over.
"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.
In other bullion markets, U.S. gold futures for June
delivery <GCM8> rose $18 an ounce to $931.20 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 precious metals, silver tracked gold to rise more
than 2 percent, palladium jumped over 4 percent and platinum
gained on persistent worries about output in main producer South
Africa that accounts for 80 percent of the world's supply.
Spot platinum <XPT=> rose to $2,030/2,040 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 $18.14/18.19 from $17.77/17.82 an
ounce. Spot palladium <XPD=> jumped to a high of $456.50 an
ounce before falling to $451/459 an ounce, versus $436/440 in
New York on Friday.
(Additional reporting by Anna Ringstrom in London and Lesley
Wroughton in Washington)
(Reporting by Atul Prakash; editing by Nigel Hunt)
