(Recasts, updates with closing prices, market activity, adds
NEW YORK to dateline)
By Frank Tang and Atul Prakash
NEW YORK/LONDON, May 6 (Reuters) - Gold ended higher on
Tuesday as record-high oil prices lifted bullion's appeal as an
inflation hedge, but investors remained cautious after a recent
sell-off to four-month lows.
Gold's long-term bull trend remained in place, dealers
said, although it was seriously dented by heavy losses last
week.
Spot gold <XAU=> was at $877.40/878.60 an ounce by New
York's last quote at 2:15 p.m. EDT (1815 GMT), up from
$871.15/872.55 in New York late on Monday but still well below
a record high of $1,030.80 hit on March 17.
"We saw a fairly big retracement last week and there was a
feeling that probably it was overdone. There has been some
buying as support is coming back in," said Daniel Hynes, metals
strategist at Merrill Lynch.
"But it doesn't look strong enough to really kick-start a
sustained upward trend. The effect of oil is less than we have
seen in the past. It may continue to trade in a fairly tight
range and struggle to push above $900 in the short term."
U.S. crude futures <CLc1> surged to a record high $122.73 a
barrel, the latest spurt in an advance that has seen prices
double over the past 12 months.
Oil could shoot up to $200 within the next two years as
part of a "super-spike" driven by poor growth in oil supplies,
investment bank Goldman Sachs said in a research note.
[]
"As long as we continue to feel that inflation creep into
our day-to-day lives, gold will work higher," said George
Nickas, precious metals broker at FC Stone in New York.
Nickas said gold's sharp fall from its record high was only
a correction, and its future direction should be based on its
own fundamentals instead of oil's strength.
Despite record high oil prices and a weaker dollar, it
appeared gold was not taking much direction from these factors,
said Frederic Panizzutti, metals analyst at MKS Finance, adding
that gold's correlation with oil and the dollar appeared to
have weakened.
U.S. gold futures for June delivery <GCM8> settled up $3.60
at $877.70 an ounce.
PHYSICAL DEMAND
Some analysts expected gold to gain further.
India, the world's largest gold consumer, celebrates on
Wednesday and Thursday Akshaya Tritiya, a festival when many
Hindus buy precious metals in the belief it will give them
lasting prosperity.
"I don't think the longer-term bull market in gold is over,
but certainly it has to do a lot of repairing and building
before it goes back up," said Adam Hewison, cofounder of
MarketClub.com.
In the official gold sector, International Monetary Fund
member countries voted to broaden the fund's investment reach,
including creation of an endowment with profits from the
proposed sale of 403 tonnes of gold. []
Spot platinum <XPT=> rose to $1,948/1,968 an ounce from
$1,914.50/1,934.40 late in New York on Monday, but was still
well below a record high of $2,290 an ounce on March 4.
Silver <XAG=> rose to $16.86/16.92 from its Monday U.S.
close of $16.64/16.70 an ounce. The metal struck a 27-year high
of $21.24 on March 17.
Palladium <XPD=> was up at $427.50/435.50 from
$416.50/424.50 an ounce, but remained below a 6-1/2-year high
of $590 on March 4.
(Additional reporting by Lewa Pardomuan in Singapore; Editing
by David Gregorio)
