* Bullion ends tad up after initially rises toward $1,000
* Dollar rise partially erases gold's early gains
* Gold market vulnerable to short-term profit-taking
(Recasts, updates with closing prices, comments; adds second
byline, dateline)
By Frank Tang and Humeyra Pamuk
NEW YORK/LONDON, Sept 28 (Reuters) - Gold ended a hair
higher on Monday after initially rising toward $1,000 an ounce,
with currency factors dominating direction, but analysts said
the market remained vulnerable to fresh losses after short-term
investors lightened positions last week.
On Monday, a wave of economic optimism prompted investment
inflows into asset classes across the board, bolstering the
status of gold as a hedge against inflation. Wall Street rose
nearly 2 percent, while crude oil futures also jumped $1, to
$67 a barrel.
U.S. December gold futures <GCZ9> settled up $2.50 at
$994.10 an ounce on the COMEX division of the New York
Mercantile Exchange.
Spot gold <XAU=> stood at $991.25 an ounce at 2:45 p.m. EDT
(1845 GMT), slightly up from $990.95 an ounce late in New York
on Friday.
A bout of heavy selling last week took the market sharply
below the psychologically significant $1,000 mark.
"We will need to see ongoing good physical and ETF demand
or otherwise the weight of spec longs in the market might
trigger some disappointed long liquidation," said Simon Week,
director of precious metal sales at Bank of Nova Scotia in
London.
Bullion's failure to stay above $1,020 an ounce prompted an
unwinding of long positions on the COMEX gold futures market.
Long positions -- buying to profit from further gains -- had
hit a record high last week for a third straight week.
[]
John Reade, head of metals' strategy of UBS, said that gold
and silver could trade much lower in coming weeks if the dollar
remained strong, and broader asset markets stayed under
pressure.
DOLLAR RISE ERASES GOLD GAINS
On Monday, initial gains in gold dissipated as the dollar
accelerated gains versus the euro <EUR=>. A stronger dollar
makes gold and other commodities priced in the U.S. unit less
attractive for non-U.S. investors.
But with most analysts maintaining a bearish stance on the
dollar, gold was still seen standing in good stead for another
attempt on the March 2008 record high scored at $1,030.80.
"The dollar feels like it has to go much lower from where
it is and gold could benefit from that," said Afshin Nabavi,
head of trading at MKS Finance.
In the physical market, however, dealers said demand was
supportive for gold at the lower levels with Asia-based
operators seeing jewelry demand pick up in India as the festive
period approaches.
In other precious metals, silver took a lead from the
slight rally in gold and climbed to $16.16 <XAG=> from $16.00
Platinum <XPT=> stood at $1,274 from $1,272.50 and
palladium <XPD=> was at $287 from $288, its late Friday quote
in New York.
Close Change Pct 2008 YTD
Chg Close % Chg
US gold <GCZ9> 994.10 2.5 0.3 884.3 12.4
US silver <SIZ9> 16.195 0.135 0.8 11.295 43.4
US platinum <PLV9> 1286.00 1.40 0.1 941.50 36.6
US palladium <PAZ9> 293.90 -1.00 -0.3 188.70 55.7
Prices at 2:44 p.m. EDT (1844 GMT)
Gold <XAU=> 991.25 0.30 0.0 878.20 12.9
Silver <XAG=> 16.17 0.17 1.1 11.30 43.1
Platinum <XPT=> 1274.00 1.50 0.1 924.50 37.8
Palladium <XPD=> 287.00 -1.500 -0.5 184.50 55.6
Gold Fix <XAUFIX=> 991.75 1.25 0.1 836.50 18.6
Silver Fix <XAGFIX=> 15.91 -29.00 -1.8 14.76 7.8
Platinum Fix <XPTFIX=> 1272.50 5.50 0.4 1529 -16.8
Palladium Fix<XPDFIX=> 287.00 3.00 1.0 365.0 -21.4
(Additional reporting by Veronica Brown in London; Editing by
Christian Wiessner)
