(Recasts with quotes, prices, changes dateline, pvs SINGAPORE)
By Atul Prakash
LONDON, March 25 (Reuters) - Gold rebounded on Tuesday after
the dollar resumed its downward trend, but weaker oil prices
reduced the metal's appeal as a hedge against inflation and
capped gains, analysts said.
But investors remained cautious after their confidence was
shaken by a recent sell-off in commodities, with gold tumbling
more than 10 percent last week since spiking to a record high of
$1,030.80 an ounce on March 17.
Platinum has fallen more than 20 percent from this month's
record high of $2,290 before marginally recovering, silver has
slipped 20 percent from a 27-year high and palladium has
plummeted nearly 30 percent before ticking higher.
Gold <XAU=> hit a low of $911.50 an ounce before rebounding
to $934.80/935.70 by 1114 GMT, as bargain hunters resurfaced
after a long Easter holiday. It closed at $920.90/921.70 in New
York late on Monday, about $16 above last week' one-month low.
"We see some consolidation in the market between $910 and
$950, but the potential clearly remains on the upside," said
Frederic Panizzutti, analyst at MKS Finance.
"Any continuation in the dollar's downside trend would
enable gold to move towards the upper side of the range and
possibly break it, but after the massive price correction, the
market would be cautious."
The dollar fell broadly, snapping four days of gains, with
persistent nerves over the health of the U.S. economy dominating
sentiment.
The dollar tumbled to a record low against the euro last
week when the announcement of U.S. bank Bear Stearns' <BSC.N>
takeover at a rock-bottom price stoked fears that other major
financial firms could be casualties in the crisis.
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 PRESSURE
Gold was under pressure from oil, which fell for the fourth
straight day as concerns about weaker demand in the U.S., the
world's top consumer, extended a retreat that has knocked a 10th
off prices since last week.
"The market seems to be cautious after a massive crash and
this fear to re-enter the market is likely to disappear as gold
continues to stay above key supports," said Pradeep Unni,
analyst at Vision Commodities in Dubai.
"We reiterate that fundamentals of gold that have been
supporting its rally for the last eight years and more haven't
changed in the last week's fall. Seldom do we get an opportunity
to buy a commodity 10-12 percent cheaper in a bull market."
In other gold markets, U.S. futures for April delivery
<GCJ8> rose $16 an ounce to $934.70, but off a record high of
$1,033.90 an ounce hit last week.
Investors awaited U.S. data later in the day including the
S&P/Case Shiller indexes on U.S. housing prices, along with the
Conference Board's report on consumer confidence in March.
In other metals, spot platinum <XPT=> rose to $1,915/1,925
an ounce after falling as low as $1,865, against $1,880/1,890
late in New York.
"Despite ongoing long liquidation from speculative type
players, supply disruptions in South Africa and strong
investment demand will continue to underpin the platinum market,
which will see a substantial supply deficit this year,"
TheBullionDesk.com said in a daily note.
Palladium <XPD=> rose to $437/443 an ounce from $427/432,
while silver <XAG=> was up at $17.70/17.75 an ounce from
$16.95/17.00 in the U.S. market late on Monday.
(Reporting by Atul Prakash; editing by Chris Johnson)
