(Recasts, adds analyst comments, closing prices, market
activity, and NEW YORK to dateline)
By Frank Tang and Atul Prakash
NEW YORK/LONDON, April 21 (Reuters) - Gold ended lower on
Monday after initially rising on the back of 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 a historic high of $1,030.80 on March 17 also lowered
market sentiment.
Platinum group metals also finished weaker as jewelry
demand suffered due to sharply higher prices, dealers said.
Gold <XAU=> rose as high as $928.50 an ounce and was at
$913.80/914.60 at 2:15 p.m. EDT (1815 GMT), against
$916.40/917.20 late in New York on Friday, when it touched a
one-week low of $904.35.
"It appears that the market is consolidating here. Perhaps
people are cautious, but the market hasn't collapsed in any way
and still holding significantly high levels," Peter Hillyard,
head of metals trading at ANZ Investment Bank, said.
Jonathan Jossen, independent floor trader in New York, said
that gold should be trading much higher with record-high oil
prices and the likelihood of more writedowns by global financial
institutions.
The dollar fell broadly after weaker-than-expected Bank of
America profits damped investors' initial optimism that
companies may escape the pinch of the crisis in global credit
markets. []
U.S. crude futures <CLc1> hit a record high of $117.76 per
barrel. They settled up 79 cents at $117.48 per barrel.
Gold is generally seen as a hedge against oil-led
inflation. The metal also moves in the opposite direction of
the dollar, as a weaker U.S. currency makes gold cheaper for
holders of other currencies and often lifts bullion demand.
Analysts said BoA's results suggested the fallout from the
credit crisis may not be over as some have speculated, chilling
risk appetite as such problems were expected to continue
weighing on the U.S. economy and the dollar.
"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.
GOLD VULNERABLE
U.S. gold futures ended higher, with the most active
contract for June delivery <GCM8> settled up $2.40 at $917.60
an ounce.
Gold miners cut their hedging positions by 8 percent to
26.86 million ounces in the fourth quarter of 2007 from the
previous three months, with the full-year decline setting a
record of 14.34 million, a report said. []
But the quarterly report by Societe Generale and metals
consultancy GFMS Ltd said there was increasingly limited scope
for a significant reduction in the global hedge book in 2008.
The Swiss National Bank's gold holdings fell by 313,200
ounces to 35.79 million ounces in March. []
Meanwhile, the European Central Bank said it favored
Japanese yen over U.S. dollars when it used the proceeds of
gold sales to boost its foreign currency reserves in 2007.
[]
Spot platinum <XPT=> fell to $2,005/2,015 an ounce from
$2,035/2,050 late on Friday in New York, while Palladium <XPD=>
traded flat at $450/454 an ounce.
"There was a pricing sell-off in platinum and palladium,
which showed some resistance to the high prices by the jewelry
trade for the most part," said George Gero, vice president of
RBC Capital Markets Global Futures in New York.
Silver <XAG=> declined nearly 2 percent to $17.39/17.44 an
ounce from $17.87/17.92 late on Friday.
(Editing by Matthew Lewis)
