(Updates with quotes, prices)
By Alastair Sharp
LONDON, April 14 (Reuters) - Gold bounced back in afternoon
trade on Monday, with bullion buying gathering pace after the
dollar turned negative against the euro, and oil prices jumped.
Spot gold <XAU=> traded choppily, with prices falling as low
as $914.10 an ounce before rebounding to $931.10. It was quoted
at $928.80/929.60 at 1439 GMT, versus $924.6/925.40 in New York
late on Friday.
"It is just a reaction to the U.S. dollar," said Daniel
Hynes, metals strategist at Merrill Lynch.
"Over the past few months, there has been a multitude of
drivers pushing prices both up and down. We can expect to see
something different every day," he said, adding risk aversion
and rising global fears of inflation might influence the market.
The dollar retreated, giving up early gains, as worries
about a gloomy U.S. economic outlook outweighed the Group of
Seven nations' heightened concern about currency volatility.
A first quarter-loss at Wachovia Corp <WB.N>, the
fourth-largest U.S. bank, added to bearish sentiment on the
dollar. Merrill Lynch <MER.N> and Citigroup <C.N> report results
later in the week and analysts expect both to announce billions
of dollars worth of write-downs.
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.
Oil jumped owing to a U.S. pipeline shutdown and some
production losses in Nigeria following a fire at a flow station.
Despite a recovery in gold prices, some analysts said the
metal would continue to trade in a range in the near term.
"Until the euro/dollar pair breaks out of its recent range
of $1.5550-$1.5860, the precious metals are also likely to
continue to tread water," said Tom Kendall, metals strategist at
Mitsubishi Corp.
"Bullion investors are still bullish over three to six-month
timeframe, but we would caution that further liquidation in
Asian equity markets could trigger another round of distress
selling in commodities in the near term."
BARGAIN HUNTING
Investors often sell profitable positions in commodities to
cover margin calls in other markets, such as equities.
Fallout from losses at General Electric and other factors
pointing to a U.S. recession hit global stock markets hard, with
Asian shares tumbling and European stocks dropping for the fifth
session in a row before paring losses.
"Bargain buying could lift prices ahead of what promises to
be a nervous week," Standard Bank said in a report.
Platinum <XPT=> fell as low as $1,940 an ounce and was last
quoted at $1,960/1,970, against $2,002/2,007 late on Friday. It
hit a record high of $2,290 on March 4.
Citigroup Global Markets raised its platinum price forecasts
to $2,005 an ounce in 2008 and $1,800 in 2009 from its earlier
prediction of $1,696 and $1,500 an ounce respectively.
"The move in the platinum price above $2,000 during the
first quarter of 2008 has set a new benchmark for the metal
price in the near term, as fundamental (supply and demand) and
external market factors weigh heavily on uncertainty surrounding
the market for PGMs," it said in a market report.
Silver <XAG=> fell to a low of $17.25 an ounce before rising
to $17.79/17.84 an ounce, against $17.75/17.80 in New York.
Palladium <XPD=> fell to $455/463 an ounce from $466/474.
(Additional reporting by Atul Prakash; editing by Daniel
Magnowski)
(Reporting by Alastair Sharp)
