August 28, 2009 / 9:48 AM / 10 years ago

PRECIOUS-Gold hits 3-wk high as soft dollar supports

* Dollar in doldrums after Thursday’s dip; oil near $73/bbl * South African union rejects Anglo Platinum wage offer

(Updates prices, adds consumer sentiment data)

By Jan Harvey

LONDON, Aug 28 (Reuters) - Gold hit a three-week high above $960 an ounce on Friday as buying linked to the weaker dollar pushed the metal through technical resistance, before paring gains after U.S. consumer sentiment data pressured the euro.

Spot gold XAU= hit a high of $961.00 an ounce, its firmest level since Aug. 7, and was bid at $955.10 an ounce at 1434 GMT, against $946.75 an ounce late in New York on Thursday.

Prices rose after heavy selling of the dollar late on Thursday, particularly against the Swiss franc, knocking the U.S. currency to multi-week lows versus the euro.

“In the near term is it still predominantly the currency that is in the driving seat,” said Saxo Bank senior manager Ole Hansen.

“That has managed to tip (gold) through a technical level where new buying and short covering has been triggered this morning, and that has given us a bit of momentum on the upside.”

Gold typically moves in a close inverse relationship with the dollar, as it becomes cheaper for holders of other currencies as the U.S. unit softens. Gold was also being bought as an alternative asset to the falling dollar.

“We touched these highs yesterday in the euro-dollar, and we haven’t really come back from that,” said Hansen. “The euro has elevated to slightly higher levels now, and that has given (gold) the support that’s needed now to test higher.”

The U.S. unit was little changed on Friday versus a currency basket, but lifted from lows against the euro after data showed consumer confidence fell to its lowest in four months in August, denting interest in currencies seen as higher risk. [FRX/]

Oil climbed after Thursday’s better-than-expected U.S. GDP and jobs data boosted interest in nominally higher-risk assets like equities and commodities. [O/R]

U.S. gold futures for December delivery GCZ9 on the COMEX division of the New York Mercantile Exchange rose $9.70 to $957.00 an ounce, off a high of $964.60. [FRX/]

SILVER RISES

Silver was also helped by gains in base metals, with copper up more than 4 percent. Silver, also used as an industrial metal, rose to $14.70 an ounce from $14.24. [MET/L]

On the wider markets, European shares rose more than 1 percent on Friday, while U.S. stocks were higher, though they also pared gains after the consumer sentiment data. [.EU] [.N]

Platinum XPT= was supported by a strike at South Africa’s Impala Platinum (IMPJ.J) and news that a union had rejected the latest wage offer from Anglo Platinum (AMSJ.J), the world’s largest producer of the metal. [ID:nWEA8450]

Platinum XPT= was at $1,242 an ounce against $1,240.50, and palladium XPD= was at $286 against $284. South Africa is the source of four-fifths of the world’s platinum.

The National Union of Mineworkers said Implats, the world’s number two platinum producer, had failed to secure a court order to stop the strike. Some workers at its Rustenburg mine have been on strike since Wednesday. [ID:nL2590523]

But a rise in platinum stocks after demand fell for the autocatalyst material, news of capacity cuts from Toyota earlier this week, and hopes industrial action will be resolved quickly are limiting gains, analysts said. [ID:nBNG459680]

“The market reaction to these supply interruptions help confirm our view that this is not an attractive tactical entry point into new long platinum positions,” said UBS analyst John Reade in a note. (Reporting by Jan Harvey; Editing by Keiron Henderson)

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