(recasts, adds quotes, changes prices, pvs TOKYO)
By Atul Prakash
LONDON, April 21 (Reuters) - Gold steadied in Europe on
Monday after gaining overnight on record high oil prices, with
investors trading cautiously after Friday's sharp sell-off.
The metal's failure to hold above $950 an ounce since
hitting an historic high of $1,030.80 on March 17 also lowered
market sentiment, analysts said.
Gold <XAU=> rose as high as $922.60 an ounce and was quoted
at $916.15/916.85 at 1034 GMT, against $916.40/917.20 late in
New York on Friday, when it touched a one-week low of $904.35.
"Gold is really struggling to make much headway after
Friday's fall. It wouldn't be a surprise to see a test of the
downside support around $905," Tom Kendall, metals strategist at
Mitsubishi Corporation, said.
"Some of this week's earnings reports from the U.S. could
influence sentiment, and if we do go down below $900 on a
closing basis, then a test of around $885 would probably follow.
Oil doesn't want to go down right now, but sooner or later it is
likely to see more substantial correction."
Bullion investors kept an eye on the dollar, which fell
against a basket of major currencies, with residual nervousness
about inflation pressures outweighing the positive spin seen
from first quarter banking results last week.
Results on Friday from Citigroup <C.N>, the largest U.S.
bank, showed less damage from the credit market crisis than some
had expected with writedowns of $6 billion contrasting with
market rumours of writedowns approaching $22 billion.
For more clues on the corporate earnings front, investors
were awaiting reports from Bank of America <BAC.N>, the No.2
U.S. bank, due later in the day.
GOLD VULNERABLE
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 set a new record high above $117 a barrel due to
worries of supply disruptions from major producers and comments
by OPEC reiterating there is no need to raise output.
"Short-term, gold looks set to spend more time in the
$900-$930 area and remains vulnerable to a test back towards the
April 1st low of $872 as speculators continue to take profit in
order to increase their cash liquidity," said James Moore,
analyst at TheBullionDesk.com.
The most active U.S. gold futures contract for June delivery
<GCM8> rose $4.80 to $919.80 an ounce.
In industry news, Peter Hambro <POG.L>, the second-largest
gold miner in Russia, announced its first dividend as it posted
a 20 percent rise in 2007 profit on higher output and prices.
The firm said in January that 2007 gold output climbed 14
percent to 297,300 ounces. It reiterated a target to boost
output to between 350,000 ounces and 400,000 ounces this year.
The Swiss National Bank's gold holdings fell by 313,200
ounces to 35.79 million ounces in March. []
In June 2007, the bank said it would sell 250 tonnes of gold
by September 2009, in line with an agreement among European
central banks to limit gold sales to 500 tonnes a year. Last
year, it sold 145 tonnes of gold under the announced programme.
Spot platinum <XPT=> fell to $2,022.50/2,034.50 an ounce
from $2,035/2,050 late on Friday. Palladium <XPD=> was up $3 at
$453/456 an ounce, but silver <XAG=> declined to $17.76/17.81 an
ounce from $17.87/17.92 late on Friday.
(Reporting by Atul Prakash; editing by Peter Blackburn)
