* Dollar rebounds versus the euro after two-day sell-off
* Inflation view buoys gold after Fed plan to print money
* Platinum tracks gold up to near 6-month high
(Updates prices)
By Jan Harvey
LONDON, March 20 (Reuters) - Gold edged down on Friday as
the dollar rebounded against the euro, prompting profit taking
in the precious metal after its rally to a three-week high
earlier in the session.
But prices are firmly underpinned by interest in the metal
as a haven from inflation and broad dollar weakness in the wake
of the U.S. Federal Reserve's move towards quantitative easing.
"The past two days' worth of upside puts us back in bullish
territory," said Alan Plaugmann, head of futures and options at
Saxo Bank. "There is some resistance at $958.50. A sustained
break of that level, and we could see some more upside."
Spot gold <XAU=> was at $954.70/955.90 an ounce by 1502 GMT
from $958.60 late on Thursday. Earlier it hit a peak of $966.70
an ounce, its firmest since Feb. 25.
U.S. gold futures for April delivery <GCJ9> on the COMEX
division of the New York Mercantile Exchange dipped $4.50 to
$954.30 an ounce.
Prices have risen sharply since the Fed announced plans on
Wednesday to buy $300 billion in longer-dated Treasuries,
flooding the market with dollars. The move prompted a sharp drop
in the U.S. currency and an increase in inflation fears.
"When you look at the gold market, there is a huge dynamic
in place, which is an increasing loathing of currencies," said
Nick Moore, an analyst at RBS Global Banking & Markets. "The
only true currency, which is gold, is the beneficiary of that."
"If central banks around the world are keen to avoid
deflation, then by definition they must have inflation, and that
plays straight into gold's hands," he added.
Gold has benefited in recent days from a sharply weaker
dollar, boosting interest in the metal as an alternative asset.
The dollar is heading for its biggest weekly fall in 24
years, although worries over the euro zone economy have pushed
it higher on the day versus the single currency. []
Investor interest in gold remains firm. The leading bullion
exchange-traded fund, the SPDR Gold Trust <GLD>, said a 15.28
tonne inflow on Thursday had lifted its holdings to a record.
Buying of gold by ETFs, which back the securities they issue
with physical stocks of bullion, has formed a major plank of
demand in recent months. SPDR alone has added 323 tonnes of gold
to its reserves so far this year, against 17 tonnes a year ago.
EXCESS
Demand from ETFs is helping to mop up some of the excess
supply in the market left over from a drop-off in jewellery
buying. Jewellers in key markets such as India say the metal's
sharp price rise has hit sales hard. []
It has also led to a surge in supply of scrap gold as
consumers sell old or outdated jewellery to raise cash.
Barclays Capital said in a note it has raised its 2009 gold
price view to $940 an ounce. "Plans for further quantitative
easing by the U.S. has seen the dollar nosedive," it said. "In
that environment, gold will shine." []
Among other precious metals, platinum rose to a near
six-month high of $1,127.50 an ounce, boosted by dollar weakness
and strength in the gold price.
The metal, chiefly an industrial commodity, may also benefit
from a shift in analysts' attention from a strongly recessionary
outlook in the wake of the Fed statement on Wednesday.
Spot platinum <XPT=> was at $1,097/1,105 an ounce from
$1,122.50, while spot palladium <XPD=> was at $203/208 an ounce
from $203.50. Silver <XAG=> inched down to $13.55/13.62 an ounce
from $13.57, tracking gold.
(Editing by Anthony Barker)
