* Gold hits two-week high on firm oil and soft dollar
* Thin volumes with U.S. market on holiday Monday
* Strong jewellery data from Asia underpins prices
(Recasts, updates prices and comments)
By Anna Stablum and Humeyra Pamuk
LONDON, Aug 29 (Reuters) - Rising oil prices and a soft
dollar boosted gold on Friday, climbing towards its highest in
two weeks while jewellery demand also supported prices.
Spot gold <XAU=> firmed to $836.75/837.75 an ounce by 1327
GMT from $831.45/832.65 late in New York on Thursday, after
rising as high as $838.30 an ounce, nearing $844.00 an ounce,
its highest level since Aug. 11.
"We still see incredibly strong investment and jewellery
demand," said analyst John Reade at UBS. "The market has been
tracking euro/dollar."
U.S. data showed personal income tumbled unexpectedly in
July and spending slowed as the effects of government stimulus
wore off and an inflation measure was at a 17-year high, a
government report showed. []
The dollar slipped as investors bet the currency's steepest
monthly rise in over a decade had been too rapid while the U.S.
data had little impact on both the currency and the precious
metals market.
Oil rose by more than $2 above $117 a barrel, as Tropical
Storm Gustav was poised to enter the Gulf of Mexico, raising
concerns about its impact on U.S. offshore oil and gas output.
"Gold is tracking oil higher," said Mitsubishi analyst Tom
Kendall. "As long as Gustav keeps heading towards the Gulf of
Mexico gold will be supported and might even rise above $840."
The market was awaiting further U.S. data due later in the
day. The U.S. Chicago Purchasing Management Index is due at 1345
GMT and the Reuters/Michigan sentiment data at 1355 GMT.
"Also, the public holiday in the United States on Monday
might see investors consolidate positions," Manqoba Madinane at
Standard Bank in a research note.
Gold has bounced as much as 9 percent since tumbling to
nine-month lows around $773 two weeks ago, on high oil prices and
demand from jewellers in Asia and other parts of the world. But
gold is well below a record high of $1,030.80 hit in March.
STRONG DEMAND FROM INDIA
With gold prices trading 20 percent below an all-time high,
physical demand was seen supporting the market.
"I've noticed that Indian housewives are far better
forecasters of the gold price than most of us paid to do the job
-- and today Indian housewives are buying the yellow metal,"
said Jeffrey Nichols of American Precious Metals Advisors.
"Fortuitously, physical demand has picked up sharply in the
past month, particularly among retail investors. We've seen this
in India where jewellery demand has picked up early in response
to low prices ahead of the coming festival season."
Spot platinum <XPT=> fell to $1,467.50/1,487.50 an ounce from
$1,469.00/1,489.00 late in New York on Thursday.
Platinum, which plummeted to 11-month lows around $1,296 last
week, has suffered from expectations car demand will slow as the
global economy falters, cutting demand for autocatalysts.
Spot palladium <XPD=> rose to $299.00/307.00 an ounce from
$289.00/297.00 an ounce. Silver <XAG=> firmed to $13.73/13.79 an
ounce from $13.64/13.70.
(Additional reporting by Lewa Pardomuan; editing by
Christopher Johnson)
