Gold eases from highs but oil, dollar support

By Jan Harvey

LONDON (Reuters) Gold eased a touch on Thursday as investors took profits after bullion touched a 10-week high, but record oil prices and a weaker dollar underpinned the market.

Traders awaited a European Central Bank decision on interest rates at 1145 GMT, and U.S. jobs data later in the session, which could both have a significant impact on the dollar and therefore on gold.

Gold was at $940.00/941.00 an ounce at 0940 GMT, slightly down from $942.60/943.60 an ounce late in New York.

It hit a high of $946.50 an ounce on Wednesday, its strongest level since April 17, on fears of rising energy costs.

While the ECB was widely expected to raise rates by a quarter-point on Thursday, markets were awaiting its accompanying statement for clues on future monetary policy.

Any sign of more hikes to come could support the euro against the dollar, thus boosting gold.

"If the ECB is flagging up its worries about inflation much more than growth, the euro's going to be stronger and the dollar's going to be weaker, which will be bullish for gold," said Standard Chartered analyst Dan Smith.

Gold typically moves in the opposite direction to the U.S. currency, as it is bought as an alternative investment. A weaker dollar also makes dollar-priced gold cheaper for holders of other currencies.