(Recasts, changes dateline, pvs SINGAPORE)
By Atul Prakash
LONDON, March 26 (Reuters) - Gold hit a one-week high on
Wednesday as a falling dollar and firm oil prices encouraged
investors to shift money back into the market after last week's
heavy sell-off.
Gold <XAU=> rose to a high of $948.80 an ounce and was
quoted at $948.20/949.10 at 1102 GMT, against $934.60/935.40
late in New York on Tuesday.
"We are still going to have another leg up towards $1,000,
but I think it might be slower than the run up we saw the last
time," said Suki Cooper, metals analyst at Barclays Capital.
"There has been some profit taking, but I don't think the
overall trend has been damaged," she said, adding dollar
weakness, inflationary concerns, expectations of further Fed
rate cuts and financial market worries were expected to continue
supporting the market.
Gold hit a record of $1,030.80 on March 17 before a broad
sell-off in commodities dragged down prices to a one-month low
of $904.65, briefly hurting investor confidence in the metal,
seen as an alternative investment and a hedge against inflation.
The euro rallied versus the dollar after a surprise rise in
German business sentiment poured cold water on any expectations
of near-term euro zone interest rate cuts.
A weaker dollar makes gold cheaper for holders of other
currencies and often lifts bullion demand. The metal is also
generally seen as a hedge against oil-led inflation.
WEAKENING DOLLAR
Oil rose above $102 a barrel as a strike disrupted
operations at a French oil refining hub and a weakening dollar
prompted investors to shift money back into commodities.
"Short-term we expect gold to remain vulnerable to profit
taking as book squaring is seen before month/quarter-end, but
support should remain strong in front of $900," said James
Moore, precious metals analyst at TheBullionDesk.com.
"In the coming weeks and months, negative dollar sentiment
will remain a key driving force behind gold's bull trend, as
further rate cuts by the Fed will drive investors to stronger
yielding assets."
Gold futures for April delivery <GCJ8> on the COMEX division
of the New York Mercantile Exchange rose $14 an ounce to $949,
but were off last week's record high of $1,033.90.
Platinum was supported by supply fears following a power
crisis in top producer South Africa. Palladium and silver also
firmed but remained below their recent highs.
Spot platinum <XPT=> was at $1,985/1,995 an ounce, compared
with $1,960/1,970 in New York on Tuesday and a record high of
$2,290 hit on March 4.
South Africa's Public Enterprises Minister Alec Erwin said
on Tuesday that power utility Eskom's ability to raise capital
could be undermined if it was not allowed to raise tariffs.
[]
Eskom has struggled to cope with rising demand due to years
of underspending on generating capacity. The energy grid came
close to collapse in January, forcing gold and platinum mines to
shut down for five days and driving platinum to record peaks.
Silver <XAG=> rose to $18.12/18.17 from $17.78/17.83 an
ounce, while palladium <XPD=> was up at $450/455 an ounce,
versus $442/447 in the U.S. market late on Tuesday.
(Reporting by Atul Prakash; editing by Chris Johnson)
