(Recasts, adds closing prices, analyst comments, adds NEW YORK
to dateline)
By Frank Tang and Alastair Sharp
NEW YORK/LONDON, April 14 (Reuters) - Gold ended higher on
Monday, with bullion buying gathering pace after rising oil
prices stirred inflation fears, and dealers said bullion's
upward trend remained intact.
Spot gold <XAU=> traded choppily, with prices falling as low
as $914.10 an ounce before rebounding to $931.10. It was quoted
at $925.30/926.10 by New York's last quote at 2:15 p.m. EDT
(1815 GMT), versus its previous finish of $924.60/925.40 late on
Friday.
U.S. crude futures <CLc1> ended up $1.62 at $111.76 a barrel
on Monday, boosting gold's appeal as a hedge against inflation.
Dealers said that a combination of rising inflation, the
dollar weakness and a low U.S. interest rate environment could
lift gold to its record high.
Spot gold hit a record high of $1,030.80 an ounce on March
17, and then fell to a two-month low of $872.90 last week in a
broad commodities sell-off. It has partially recovered since
then.
"The basic underpinnings for the current bull market are in
place for gold and other hard assets. As long as we see the
Federal Reserve cutting short-term rates, and there will be more
pressure on the inflation rate, that trend will be in place,"
said Thomas Winmill, portfolio manager of the $260 million Midas
Fund <MIDSX.O> in New York.
Winmill said he expected gold could hit $1,500 to $1,600 an
ounce in the next 12 to 18 months.
Worries about the U.S. economic outlook initially weighed on
the dollar. But the U.S. currency retraced most of its losses
and was flat in afternoon trade.
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.
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.
BARGAIN HUNTING
Investors often sell profitable positions in commodities to
cover margin calls in other markets, such as equities.
Fallout from a profit drop at General Electric Co <GE.N> 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.
U.S. gold futures for June delivery <GCM8> ended $1.70
higher at $928.70 an ounce amid light volume.
Platinum <XPT=> fell as low as $1,940 an ounce and was last
quoted at $1,958/1,968, against $2,002/2,007 late in the U.S.
market on Friday. It hit a record high of $2,290 on March 4.
Analysts cited heavy selling in the overnight sessions from
the over-the-counter and Tokyo's TOCOM traders.
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.
Silver <XAG=> fell to a low of $17.25 an ounce before rising
to $17.71/17.76 an ounce, against $17.75/17.80 late in New York
on Monday. Palladium <XPD=> fell to $459/463 an ounce from its
Friday close of $466/474.
(Additional reporting by Atul Prakash in London, editing by
Matthew Lewis)
