* U.S. dollar, equities and inflation drive gold
* Slips from 1-week high as oil prices ease
(Adds new comment/details, changes dateline PVS SINGAPORE)
By Anna Stablum
LONDON, Jan 19 (Reuters) - Gold rose to its highest in a
week on Monday before trimming gains as the dollar strengthened
against the euro and oil prices eased, analysts said.
"It is mostly a story about the U.S. dollar, equity markets
and inflation at the moment," analyst Eugen Weinberg at
Commerzbank said.
Gold had little incentive to move higher, with oil prices
sliding, but firm buying once prices moved towards $800 an ounce
created a floor, he said.
Gold <XAU=> rose as high as $845.55 an ounce, its highest
level since Jan. 12, before trading at $842.25 an ounce by 1041
GMT, up from $841.85 in New York late on Friday, as oil prices
reversed course and slipped.
Demand from the jewellery industry was seen weak this year,
accounting for 70 percent of total demand for gold, and falling
inflation would also cap prices, Commerzbank's Weinberg said.
Gold is traditionally bought as an inflation hedge and with
inflationary pressures diminishing interest could fade.
On Friday, data showed U.S. inflation slowing to a
half-century low last year, with the Consumer Price Index
dropping 0.7 percent in December, a third straight decline.
[]
"Although given all these negative factors I still expect
investor demand to be strong this year," Weinberg said, adding
investors would buy gold to diversify their portfolios.
A firmer dollar weighed on gold as dollar-priced commodities
tend to fall as the dollar strengthens as it makes them more
expensive for holders of other currencies.
The euro eased to $1.3274 <EUR=> as investors remained
cautious about the banking sector and economy, overriding the
latest UK bank bailout plan and optimism for new U.S. stimulus
measures. []
OBAMA MESSAGE
The incoming U.S. administration and Britain on Sunday
planned urgent and more forceful moves to reopen the world's
clogged credit markets, and President-elect Barack Obama is
preparing a "strong message" for banks after he takes over the
U.S. presidency this week. []
Oil <CLc1> edged lower to below $36 a barrel, having
risen 3 percent in the previous session. []
Sinking oil prices weighed on gold as it typically moves in
line with crude, because it is often bought as an inflation
hedge, and the direction of the oil market is an indicator of
interest in commodities.
But dealers said record bullion holdings in SPDR Gold Shares
boosted sentiment. Gold holdings in the world's largest gold
exchange-traded fund jumped another 5 tonnes to 795.25 tonnes
last week. []
"The intact popularity of the metal with investors should be
adequate to help stabilise the price at or at least just under
the $800 mark," precious metals group Heraeus said in a report,
referring to a level last seen in November.
Platinum <XPT=> was trading at $960.50 an ounce, down from
New York's trade at $946.50 late on Friday. More than 60 percent
of platinum use goes to autocatalysts to clean exhaust fumes.
More bad news for automakers emerged on Friday as
manufacturers in Japan, Europe and the United States all warned
their businesses continue to struggle and outlooks remained
uncertain. []
"Given this negative dynamic, support for platinum metals
prices from its most important demand sector is foreseeably going
to be missing this year," Heraeus said in a report.
"Despite this, we do not expect a complete collapse in the
platinum-metals prices. As we have been seeing for some months
now, new production is going to slow down as well."
Silver <XAG=> was unchanged at $11.21 and palladium <XPD=>
traded at $184 versus $183 late on Friday.
New York gold futures <GCZ9> added $32.5 an ounce to $846.8.
(Additional reporting by Lewa Pardomuan; editing by Sue Thomas)
