(Recasts, adds quotes, changes prices, pvs SINGAPORE)
By Atul Prakash
LONDON, March 10 (Reuters) - Gold eased on Monday after
rising nearly 1 percent in Asia as the dollar pared losses, and
analysts said the metal was likely to trade in a range ahead of
a U.S. Federal Reserve meeting next week.
But expectations of further interest rate cuts in the United
States and record high oil prices that have raised fears of
inflation, were likely to sustain investor interest in gold over
the medium to long-term, they said.
Spot gold <XAU=> rose as high as $980.40 an ounce before
falling to $970.90/971.80 at 1121 GMT, against $972.60/973.40
late in New York on Friday.
"The upward trend is still in place. People are just waiting
for something to take it up towards $1,000 or may be above it,"
said Michael Widmer, metals analyst at Lehman Brothers.
"I wouldn't be surprised if prices didn't do a lot ahead of
the next week's Fed meeting and, the closer we get, the less
likely that people are to take big positions."
People were cautious as the Fed meeting would give a lot of
information on issues such as the U.S. interest rate outlook and
the health of the U.S. economy, Widmer said.
Gold roared to an historic high of $991.90 an ounce on March
6 before funds cashed in. The metal has gained nearly 20 percent
in 2008, on the top of a 32 percent rise last year.
"The metal's failure to break higher on Friday suggests the
market may, just for the short-term, be in need of a phase of
consolidation before challenging $1,000," said James Moore,
precious metals analyst at TheBullionDesk.com.
"Momentum indicators have turned negative over the past two
trading days and a break below $968.50 would suggest a test back
to $952 initially, although further liquidation could pressure
gold back to $936/$924," he said in a market note.
The market kept a close eye on external price drivers such
as the dollar and oil for short-term direction.
The dollar pared losses after slipping towards record lows
as weak U.S. employment data on Friday added to concerns about
the health of the world's largest economy and heightened global
risk aversion.
EXTERNAL FACTORS
The Federal Reserve announced a series of term repurchase
operations totalling $200 billion to ease liquidity pressures,
adding to a sense that the money markets are in poor shape.
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 traded near Friday's record high above $106 a barrel,
supported by a bout of cold weather in the United States and a
sliding U.S. dollar.
Some analysts said gold might advance before falling.
"Even if on the physical side a considerable over-supply has
built up in the last weeks which can only be met by ever more
investment buying, it cannot be ruled out that gold will make
the $1,000 ounce mark, before we see some kind of a serious
reversal," German precious metals trading group Heraeus said.
Platinum fell below $2,000 an ounce on news that mines in
South Africa, the world's top platinum producer, would get 95
percent electricity supply against 90 percent. The metal has
fallen 13 percent from its record high of $2,290 on March 4.
Spot platinum <XPT=> fell to $1,986/1996 an ounce after
rising 3 pct to $2,085, against $2,020/2,030 in New York.
South Africa's Harmony Gold <HARJ.J>, the world's
fifth-biggest gold producer, has disputed reports the mining
sector would get a blanket increase in power to 95 percent and
said only certain firms would get more electricity.
[]
"The 95 percent is definitely incorrect," Chief Executive
Graham Briggs told the Reuters Global Mining Summit in London.
Silver <XAG=> fell to $19.87/19.92 from $20.11/20.16 an
ounce, while palladium <XPD=> was down at $471/480 an ounce,
against $485/490 an ounce.
(Reporting by Atul Prakash; editing by Chris Johnson)
