(Recasts, adds quotes, changes prices, pvs SINGAPORE)
By Atul Prakash
LONDON, April 22 (Reuters) - Gold rose on Tuesday on a
weaker dollar and firm oil prices, and analysts said the metal
was looking for a reason to break up through its recent trading
range and towards record highs.
But investors were cautious after gold failed to hold above
$950 an ounce. A recent sell-off also lowered market sentiment.
Spot gold <XAU=> rose as high as $921.50 an ounce and was
quoted at $918.90/919.90 at 1010 GMT, against $913.80/914.60
late in New York on Monday.
"A weaker dollar is something that did push gold prices up,
but apart from that we have relatively small price movements,"
said Michael Widmer, analyst at Lehman Brothers.
"The market is a little bit uncertain as to where gold is
going. We are trading in a very tight range and it's hard to
make any consistent trend. Gold at the moment just bounces
around," he said.
The dollar slipped against the euro to hover near record
lows, with investors awaiting U.S. housing data at 1400 GMT for
clearer direction.
A weaker dollar makes gold cheaper for holders of other
currencies and often lifts bullion demand.
The U.S. currency also came under pressure due to Hawkish
rhetoric from European Central Bank policymakers. Governing
Council member Yves Mersch said the ECB has to ask itself each
month whether a rate rise was needed to control inflation.
[]
Mersch's comments came a day after fellow Governing Council
member Klaus Liebscher said there was no reason for pessimism on
euro zone growth, suggesting the ECB will keep interest rates at
a six-year high of 4.0 percent for a while. []
The market expects the Federal Reserve to lower rates
further from the current 2.25 percent at a policy meeting on
April 29-30.
A cut in U.S. rates tends to weaken the dollar and often
helps the precious metals market.
GOLD-OIL CORRELATION
Analysts said gold's correlation with oil prices had
weakened in the past days.
"Gold seems to have partly de-linked from crude oil in the
sense that the gains in crude oil aren't fully getting reflected
into the metal," said Pradeep Unni, metals analyst at Vision
Commodities.
"Gold is reacting slow and seems to be consolidating above
key support levels before proceeding ahead," he added.
The metal is seen as a hedge against oil-led inflation.
Prices jumped to a three-week high of $952.60 on April 17
before profit taking kicked in and dragged down prices to as low
as $904.35 the following day. It has lost more than 10 percent
in value since hitting a lifetime high of $1,030.80 on March 17.
Gold had gained on speculative buying spurred by record high
oil prices and expectations of further interest rate cuts in the
United States, which has reduced the dollar's appeal.
In other metals, platinum fell 2 percent to a one-week low
at $1,965 an ounce, as profit taking persisted since a spike to
a one-month high last week.
The metal <XPT=> was last quoted at $1,986.50/2006.50 an
ounce, against $2,005/2,015 in New York late on Monday and a
record high of $2,290 on March 4.
Silver <XAG=> rose to $17.52/17.57 from $17.39/17.44 an
ounce, while palladium <XPD=> was up $1.50 at $451.50/459.50.
(Additional reporting by Tamora Vidaillet in London; editing
by Chris Johnson)
