* Gold hits a high of $886.85 on dollar before slipping
* Oil falls 4 pct after rising 14 percent on Wednesday
* Euro sheds early gains, investors await data
(Updates prices, adds graphic, quotes)
By Lewa Pardomuan
SINGAPORE, Jan 2 (Reuters) - Gold gave up gains on Friday,
having started on a firm note in early 2009 trade, as the
dollar bounced from lows, but expectations of more grim U.S.
economic data could still ignite safe-haven buying from
investors.
With many dealers still on holiday, thin trading
exaggerated movements. Japanese investors, whose purchases in
recent weeks helped bullion stay above $800, only return to the
market on Monday.
Gold <XAU=> hit a high of $886.85 an ounce before falling
all the way to a low of $870.60 on profit taking and a drop in
oil prices. By 0638 GMT, gold traded at $873.55, down $6.60
from New York's notional close on Wednesday, when it jumped
over $10.
"The U.S dollar is a bit strong against the euro. That's
why there's some selling around. There's physical selling from
Hong Kong as well," said Dick Poon, manager of precious metals
at Heraus Ltd.
"But gold is still bullish. I think in 2009, there will be
more investors involved in gold. Psychologically, people feel
the market has already stabilised."
One of the few commodities to post gains last year, gold
struck a record of $1,030.80 in March, driven by rising energy
costs and a sagging dollar.
For a graphic showing showing percentage change for a range
of commodities, including gold, click on:
https://customers.reuters.com/d/graphics/CMD_CRB0109.gif
Gold has rallied nearly 30 percent since falling to a
13-month low around $680 in late October, when a sell-off in
equities forced investors to sell gold to cover losses. "I
guess the move that we saw late on New Year's eve was just some
position squaring in very thin trade. Possibly, it's the same
for today," said Peter Tse, a dealer at Scotia Mocatta in Hong
Kong.
"It's going to be quiet and the trading range could be wide
because of poor liquidity," he said.
The euro changed course and fell to $1.3855 <EUR=>, with
dealers saying the single currency's rally at the end of last
year was overdone. Investors awaited the release of
manufacturing surveys from major economies later in the day.
The closely watched U.S. Institute for Supply Management
index was expected to show a further contraction to 35.5 in
December, from an already dire 36.2 in November. []
Dealers also watched movements on oil after prices dropped
more than 4 percent on Friday as traders bet a late-day rally
that sent prices 14 percent higher on Wednesday was overdone.
[]
"We got a slightly bullish start in the morning, and I am
surprised by the huge jump we got in crude oil on New Year's
eve," said a dealer in Singapore.
"I think we can look at the $889.55 regions for
resistance," said the dealer, referring to Monday's 11-week
high. "If we start moving above those regions, we could head
higher towards the $900 level."
Gold last traded above $900 in early October.
Platinum <XPT=> was trading at $933.00 an ounce, up $1.00
from New York's notional close. New York gold futures <GCZ9>
fell $10.1 ounce to $874.2 in electronic trade.
Precious metals prices at 0638 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 873.55 -6.60 -0.75 4.91
Spot Silver 11.12 -0.20 -1.77 -24.71
Spot Platinum 933.00 1.00 +0.11 -38.62
Spot Palladium 186.00 1.50 +0.81 -49.46
Euro/Dollar 1.3863
Dollar/Yen 91.11
(Editing by Michael Urquhart)
