(Updates quotes, prices, changes dateline, pvs SINGAPORE)
By Anna Ringstrom
LONDON, March 18 (Reuters) - Gold rose nearly 1 percent on
Tuesday on a weaker dollar, with investors waiting for a U.S.
interest-rate cut by the Federal Reserve to establish a clearer
market direction.
Bullion <XAU=> rose as high as $1,010.80 an ounce and was at
$1,008.80/1,009.00 at 1215 GMT, up from $1,001.00/1,001.80 late
in New York on Monday.
It spiked to an historic high of $1,030.80 on Monday on
concerns over the U.S. financial sector and a weak dollar before
profit-taking erased most of the gains.
"The market is likely to continue to hold around yesterday's
close ahead of the Fed rate meeting," said Suki Cooper, precious
metals analyst at Barclays Capital.
"The current environment -- inflation concerns, equity
market movements and the general credit market concerns -- is
boosting prices, but the metal is primarily taking its lead from
the dollar movement."
The dollar may come under pressure, further boosting gold
prices, should the Fed cut rates by 100 basis points, she said.
The dollar eased back towards the previous day's record lows
versus the euro on expectations of a hefty Fed rate cut that
will make the currency the second lowest yielder in the G10.
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.
But some analysts said a cut was already priced into gold
and the market would scrutinise closely the bank's statement
following the decision for indications of its future path.
"If the Fed believes that in the due time economic crisis
can be contained, then there could be marginal respite for
dollar," said Pradeep Unni, analyst at Vision Commodities.
"Gold uptrend is intact, but there are high chances of a
pull back after the decision. It is ideal to wait before fresh
buying is attempted. High volatility is also likely," he said in
a daily market note.
VULNERABLE IN SHORT-TERM
Gold has gained more than 23 percent this year on fears of
inflation as crude oil has hit records, expectations of further
rate cuts and deepening U.S. financial concerns.
"Short-term (gold) remains vulnerable to further bouts of
long liquidation, but given the likelihood of rate cuts by the
Fed and growing demand for safe-haven type assets in the current
financial climate, we expect dips to remain short-lived," James
Moore, analyst at TheBullionDesk.com, said in a report.
High prices continued to hit physical demand. Gold imports
by India, the world's largest consumer, plunged to 10 tonnes in
February from 59 tonnes in the same month a year ago.
Platinum hit a one-week low of $1,935 an ounce before
rising, while silver and palladium stayed near their recent
highs.
Spot platinum <XPT=> rose to $2,007/2,017 an ounce from
$1,980/1,990 in New York and off a record high of $2,290 hit on
March 4 on fund buying after a power crisis disrupted mining in
main producer South Africa.
Platinum was supported by news that South African power
utility Eskom may have to inform mines of a force majeure if
more of its generators trip, Eskom spokesman Andrew Etzinger
told Reuters. []
Silver <XAG=> traded at $20.33/20.38 an ounce, versus
$20.35/20.41 in New York, while spot palladium <XPD=> rose more
than 3 percent to $481/486 an ounce from $465/470.
(Editing by Chris Johnson)
