* Gold eases after earlier buying on Gaza offensive
* Gold fails to top 12-week high marked last week
* Supported by higher oil amid geopolitical tensions
By Risa Maeda
TOKYO, Jan 5 (Reuters) - Gold erased earlier gains to fall
slightly on Monday as the dollar edged higher and after
safe-haven buying in the wake of Israel's ground offensive in the
Gaza Strip petered out.
Spot gold <XAU=> touched a high of $883.55 an ounce at one
stage, but failed to top the 12-week peak of $889.55 marked last
Monday when oil rallied amid tensions in the Middle East.
As of 0545 GMT, cash gold stood at $871.60 per ounce, down
0.2 percent from New York's notional close of $873.20.
Similarly, COMEX gold futures <GCG9> erased gains and fell
0.7 percent to $873.1 per ounce in after-hours trading.
On Friday, gold futures for February delivery had settled
down $4.80 at $879.50 on the COMEX division of the New York
Mercantile Exchange.
"Gold is being hurt by the firmer dollar and as gains in oil
prices are capped," said Shuji Sugata, a manager at Mitsubishi
Corp Futures and Securities Ltd.
But the metal could test psychological resistance of $890 if
and when oil recovers to $50 per barrel and speculative buying
sets in, Sugata said.
"The downside is firmly underpinned as the conflict (in the
Middle East) looks to have no easy way of being settled," he
said.
Analysts also said that given the flood of liquidity being
provided by central banks to help resuscitate the global economy,
the metal is luring investors seeking an alternative asset.
"It only takes a tiny inflow of liquidity in the markets to
make gold shine," said Yuki Sonoda, adviser at Tokyo-based
Daiichi Commodities Co.
Gold could resume its rally as investor risk appetite will
likely stay high given hopes for a fresh economic stimulus
package from U.S. President-elect Barack Obama, supporting
equities as well as gold, Sonoda said.
Obama is seeking as much as $310 billion in tax cuts as part
of a massive economic stimulus plan. []
The euro dropped 0.1 percent to $1.3885 <EUR=>, giving up an
earlier rebound to near $1.3960 and making gold, often considered
an alternative asset to the dollar, less attractive.
Oil prices rose for a third day on Monday after an Iranian
military commander reportedly called for an oil boycott over
Israel's offensive in Gaza and on concerns over a deepening
Russian gas supply row. []
The Saturday night invasion of the Hamas-ruled Gaza Strip
followed a week of Israeli bombardments from land, sea and air --
the most serious Israeli-Palestinian fighting in decades.
[]
U.S. crude oil futures <CLG9> had jumped more than 4 percent
before trading up 1.9 percent at $47.20 per barrel.
Cash platinum <XPT=> briefly rose as high as $951.00 per
ounce, the highest since Oct. 16, before profit-taking set in.
Platinum fell 1.2 percent to $933.00, compared with $944.00
in New York. Palladium <XPD=> fell 0.5 percent to $189 an ounce
and silver <XAG=> declined to $11.43 an ounce from $11.52.
Gold futures on the Tokyo Commodity Exchange <0#JAU:> started
2009 on a positive note, helped by the weaker yen which deflates
yen-based TOCOM prices. The Tokyo market had been closed since
Dec. 31 for the New Year's holiday.
The benchmark TOCOM December contract ended the half-day
session up 21 yen per gram at 2,594 yen. It earlier rose as high
as 2,624 yen, the highest for any benchmark since Oct. 21.
Full-day trading resumes on Tuesday.
Precious metals prices at 0554 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 871.80 -1.40 -0.16 -0.95
Spot Silver 11.42 -0.10 -0.87 0.88
Spot Platinum 931.00 -13.00 -1.38 -0.11
Spot Palladium 189.00 -1.00 -0.53 2.44
TOCOM Gold 2594.00 21.00 +0.82 0.82 21117
TOCOM Platinum 2766.00 114.00 +4.30 4.30 7917
TOCOM Silver 338.40 19.10 +5.98 5.98 542
TOCOM Palladium 578.00 28.00 +5.09 5.09 746
Euro/Dollar 1.3888
Dollar/Yen 91.96
TOCOM prices in yen per gram, except for silver which is in yen
per 10 grams, spot prices in $ per ounce.
(Editing by Chris Gallagher)
