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activity, adds NEW YORK to dateline)
By Frank Tang and Atul Prakash
NEW YORK/LONDON, April 7 (Reuters) - Gold surged to a
one-week high on Monday, as bullion buying gathered pace after
an oil rally stirred inflation worries.
Bullion, however, ended off its peak as momentum was
dampened by the news that the International Monetary Fund was
set to announce plans to consider revamping its income model by
selling part of its gold.
The yellow 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.
"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," said Michael Widmer, metals
analyst at Lehman Brothers.
Gold <XAU=> rose as high as $929.10 an ounce and was at
$923.70/924.50 by New York's last quote at 2:15 p.m. EDT (1815
GMT), against $908.40/909.20 late in New York on Friday. But
the metal is still 10 percent below its record high.
U.S. crude futures <CLc1> settled up $2.86 at $109.09 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.
Active U.S. gold futures for June delivery <GCM8> settled
up $13.60, or 1.5 percent. at $926.80 an ounce.
IMF ANNOUNCEMENT 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 Feb 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.
George Gero, vice president of RBC Capital Markets Global
Futures in New York, said that the news that the IMF plan would
go to the Congress might dampen enthusiasm among bullion
investors.
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 $18.09/18.14 from $17.77/17.82 an
ounce. Spot palladium <XPD=> jumped to a high of $456.50 an
ounce before falling to $450/455 an ounce, versus $436/440 in
New York on Friday.
(Additional reporting by Anna Ringstrom in London and Lesley
Wroughton in Washington; Editing by Christian Wiessner)
