(Recasts with quotes, prices, changes dateline, pvs TOKYO)
By Atul Prakash
LONDON, April 10 (Reuters) - Gold firmed to a 10-day high on
Thursday, as a weaker dollar and strong oil prices lifted the
metal's appeal and attracted investors into the market.
Spot gold <XAU=> climbed as high as $939.30 an ounce and was
quoted at $937.80/938.60 at 1015 GMT, against $932.50/933.30
late in New York on Wednesday.
"Market sentiment is positive. If later in the quarter, the
dollar does take another leg lower, it will be perceived to be
the excuse to jump back into gold and push it through $1,000
again," said David Holmes, metals analyst at Dresdner Kleinwort.
"But the market is already long gold and we are going to
find another set of investors to take us on the next leg on the
upside," he added.
The dollar fell against the euro and hovered close to
all-time lows, with investors expecting the European Central
Bank to hold interest rates with little prospect of any signal
that they will come down soon.
Apart from the rate decisions, investors were also cautious
before a weekend meeting of the Group of Seven economic powers
which will tackle the global financial crisis.
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 record highs set on Wednesday, when a sharp
fall in U.S. crude and fuel stocks rekindled concerns about
summer supplies and boosted buying.
"Gold's role as an ultimate monetary asset is growing in
confidence amongst the investors and that is widely seen from
accelerated investment demand," Vision Commodities said.
"The market is still in favour of bulls and occasional
slides to key supports shouldn't question the long term trend."
GOLD REBOUNDS
Spot gold hit a record high of $1,030.80 an ounce on March
17 before falling to a two-month low of $872.90 last week in a
broad commodities sell-off. It has recovered since then.
U.S. gold futures also gained, with the most active June
contract <GCM8> trading $4.10 an ounce higher at $941.60.
In industry news, South African gold output fell 28.2
percent year-on-year in February, official data showed.
South Africa's mining sector has been hit by a power crisis,
with utility Eskom cutting electricity supply to 90 percent at
the end of January before upping that to 95 percent in March.
Platinum <XPT=> rose to $2,030/2,040 per an ounce from
$2,018/2,025 in New York.
"More range trade may be seen in the coming sessions after
the metal failed to conquer the resistance band between
$2,038-$2,044," said James Moore, analyst at TheBullionDesk.com.
"But with supply concerns still ongoing and mine operation
still vulnerable to power outages, the market will remain
underpinned and could easily spike to fresh highs." he said.
Palladium <XPD=> rose $1 to $457/462 an ounce, while silver
<XAG=> increased to $18.38/18.43 an ounce from $18.15/18.20 late
in New York on Wednesday.
(Reporting by Atul Prakash; editing by Chris Johnson)
