* Gold retreats on soft oil despite Hurricane Gustav
* UBS says gold could hit $900 soon
* Strong jewelry data from Asia underpins prices
(Recasts, updates with closing prices, market activity, adds
NEW YORK to dateline)
By Frank Tang and Anna Stablum
NEW YORK/LONDON, Aug 29 (Reuters) - Gold ended slightly
lower on Friday, erasing gains after an initial oil rally on
storm fears gave way to profit-taking, but strong jewelry
demand should support prices.
Spot gold <XAU=> was at $830.35/832.35 by New York's last
quote at 2:15 p.m. (1815 GMT), down from $831.45/832.65 late in
New York on Thursday, when it rose as high as $838.30 an ounce,
nearing $844, its highest level since Aug. 11.
The U.S. dollar rallied against a currency basket, on track
for its best monthly gain in nearly 16 years, boosted by a
batch of data showing a far more stable economic growth path
for the United States than the rest of the world.
Meanwhile, oil retreated and ended nearly unchanged in
spite of an initial rally as Hurricane Gustav was poised to
enter the Gulf of Mexico, raising concerns about its impact on
U.S. offshore oil and gas output
"We still see incredibly strong investment and jewellery
demand," said analyst John Reade at UBS Investment Bank. "The
market has been tracking euro/dollar."
In addition, UBS told clients in a note that gold could
rally back up towards $900 an ounce in the coming months, as a
fall from its all-time high has boosted physical demand to its
highest level in 20 years. []
U.S. gold futures for December delivery <GCZ8> settled down
$2.00 at $835.20 an ounce on the COMEX division of the New York
Mercantile Exchange.
Futures trading was quiet ahead of the U.S. Labor Day
holiday on Monday.
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 jewelers in Asia and other parts of the world.
But gold is well below its record 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=> ended higher at $1,475.50/1,495.50 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 $302.00/310.00 an ounce from
its previous U.S. finish of $289.00/297.00 an ounce. Silver
<XAG=> slipped to $13.55/13.65 an ounce from $13.64/13.70 late
in New York on Thursday.
(Additional reporting by Humeyra Pamuk in London and Lewa
Pardomuan in Singapore; Editing by Walter Bagley)
