* Oil prices slip below $38 a barrel, weighing on gold
* London trading winds down early for New Year holiday
* Gold set to gain in 2008, but other precious metals fall
(Updates prices, adds comment)
By Jan Harvey
LONDON, Dec 31 (Reuters) - Gold eased on Wednesday in thin
trade ahead of the New Year break, as oil prices softened and
the dollar ticked up against the euro.
But the precious metal 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 $860.10/862.10 an ounce at
1247 GMT, down from $872.10 an ounce late in New York on
Tuesday. But the metal is currently up some 3 percent from its
2007 close of $833.20, according to Reuters data.
"Gold is the only (metal) that has been up this year," said
Nick Moore, commodity strategist at RBS Global Banking &
Markets. "It has been a fantastic performance for gold. It has
done what it should have done."
In contrast, oil prices have 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 a weaker oil market.
On Wednesday gold slipped a touch as softer crude prices
dented 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.
[]
"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."
The other main external driver of gold, the dollar,
strengthened 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 on Wednesday, with
London trading winding down 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.
Unlike gold, the other precious metals, which are primarily
used in industry, look set to post losses year-on-year.
Silver ended last year at $14.77 an ounce, but softened a
touch on Wednesday in line with gold to $10.78/10.86 an ounce
from $10.91.
Platinum <XPT=> fell to $904/909 an ounce from $914.50,
while palladium <XPD=> eased to $182/187 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; Additional reporting by Julie
Crust; Editing by William Hardy)
