* Dollar edges up as investors mull possibility of rate hike
* Oil prices firm above $72 a barrel
* Traders say jewellery demand trickles in after weak year
(Updates throughout, changes dateline from TOKYO)
By Jan Harvey
LONDON, Oct 12 (Reuters) - Gold prices held steady near
$1,050 an ounce on Monday as the pressure exerted by the
dollar's recovery was offset by a rise in oil prices and a
slight improvement in jewellery demand.
Spot gold <XAU=> rose to $1,051.60 an ounce at 0902 GMT, up
from $1,048.25 late in New York on Friday but back from the
record high $1,061.20 set last week.
The U.S. currency edged broadly higher on Monday as
investors trimmed dollar-selling positions on caution that U.S.
interest rates could move up earlier than expected. []
Strength in the dollar typically weighs on gold, both
because it makes the metal more expensive for holders of other
currencies, and as it curbs buying of the metal as an
alternative asset.
"The stronger dollar is putting some pressure on the metal,
and it might be exposed to some short-term correction after the
recent run-up, before possibly testing new highs," said
Alexander Zumpfe, a trader at precious metals house Heraeus.
"Some positive impetus is coming from the oil price, which
(is stabilising) above $70 a barrel. Additionally, physical
demand from the jewellery sector is a supporting trigger."
Jewellery buying -- which accounted for more than half of
total gold production last year -- has been weak in 2009 as high
prices put off investors. However, it has recovered as festival
season gets underway in key bullion consumer India.
Rising crude prices also boosted interest in gold as an
inflation hedge. Oil rose above $72 a barrel amid optimism over
the pace of the global economic recovery and after a positive
demand forecast from the International Energy Agency. []
ETF DEMAND MUTED
Demand for the precious metal from exchange-traded funds was
muted. The largest, New York's SPDR Gold Trust <GLD>, reported
no fresh inflows on Friday. []
But noncommercial net long positions in COMEX gold futures
rose to an all-time high of 239,668 lots in the week ended Oct.
9, up 3.6 percent from a week before, data from the U.S.
Commodity Futures Trading Commission showed. []
In supply news, South African producer DRDGold <DRDJ.J> said
miners had resumed work at its Blyvoor mine after a three-week
wage strike. []
U.S. gold futures for December delivery <GCZ9> on the COMEX
division of the New York Mercantile Exchange edged up $4.60 to
$1,053.30 an ounce.
Among other precious metals, silver edged higher, supported
by gains in base metals. Silver is widely used in industry,
predominantly electronics manufacturing, as well as being an
investment vehicle.
Spot silver <XAG=> was at $17.80 an ounce against $17.67.
Elswhere, platinum <XPT=> was at $1,329 an ounce against $1,332,
while palladium <XPD=> was at $320 against $317.50.
Palladium climbed to its highest level since August 2008 on
Friday and is rising further on Monday. The market is being
supported by fears over tightness in Russian supply, traders
said, and by strong technical support.
"With palladium having rallied over 100 percent off its lows
of last year and trading on its highs of this year, it might be
supposed that it is time to start fishing for a top," said
technical analysts at Barclays Capital in a note.
"However, the absence of strong signs for an important high
suggests the opposite; we should stay bullish." Support for the
metal stands at $316 an ounce, they said.
(Reporting by Jan Harvey; Editing by Keiron Henderson)
