* Oil prices slip below $38 a barrel, weighing on gold
* London trading to wind down early for New Year holiday
* Gold set to gain in 2008, but other precious metals fall
(Recasts, adds detail, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Dec 31 (Reuters) - Gold eased on Wednesday as oil
prices softened in thin trade ahead of the New Year break, but
is set to be one of the only commodities to post a gain year on
year, supported by interest in bullion as a haven from risk.
Spot gold <XAU=> was quoted at $867.30/869.30 an ounce at
1029 GMT, down from $872.10 an ounce late in New York on
Tuesday.
"Further oil price erosion today could precipitate more fund
outflows," said Standard Bank analyst Manqoba Madinane.
"Precious metal investors should maintain a cautious
investment strategy throughout the day - especially given that
no major economic data releases are due today, which might leave
technical momentum signals in the driving seat."
Weakening oil prices dent gold's appeal as an inflation
hedge. Oil slipped more than 3 percent to below $38 a barrel as
fears over the effect of the economic slowdown on demand spooked
investors. []
The other main external driver of gold, the dollar, steadied
against the euro, reversing earlier losses, and was on track to
post its first annual rise versus the single currency in three
years. []
Strength in the dollar reduces bullion's appeal as an
alternative investment.
The market is likely to remain quiet today, with London
trading due to conclude after the 1200 GMT silver fix. "Given
the shortened sessions today, trade is likely to remain in a
rangebound mood," said James Moore, an analyst at
TheBullionDesk.com.
"But having consolidated above $845-50, and given the
background of economic woes and heightened geo-political
tensions, gold is well placed for a strong start to the New
Year," he added.
Gold is one of the few commodities likely to post a slight
gain on the year. Oil has tumbled 60 percent in 2009, while base
metals look set to post their worst year on record.
[]
Interest in bullion as a haven from risk has grown amid
turmoil in the global financial system, helping to counteract
pressure from a strengthening dollar and weaker oil prices.
The other precious metals, which are primarily used in
industry, look set to post losses year-on-year, however.
Silver ended last year at $14.77 an ounce, but softened a
touch on Wednesday in line with gold to $10.86/10.94 an ounce
from $10.91.
Platinum <XPT=> fell to $908/913 an ounce from $914.50,
while palladium <XPD=> eased to $181.50/184.50 from $183.
Platinum prices look set to fall sharply on the year, having
closed 2007 at $1,520 an ounce, according to Reuters data.
The metal has been knocked sharply lower this year by the
economic slowdown, which has curbed demand for cars. The
automotive sector is responsible for around half of global
platinum demand.
(Reporting by Jan Harvey; Editing by William Hardy)
