(Updates with quotes, prices)
By Atul Prakash
LONDON, April 10 (Reuters) - Gold prices erased early gains
after hitting a 10-day high on Thursday, as the dollar recovered
from lifetime lows against the euro and oil steadied.
Spot gold <XAU=> climbed as high as $939.40 an ounce before
falling to $932.10/933.00 at 1348 GMT, against $932.50/933.30
late in New York on Wednesday.
"We are still caught between the longer-term investors
looking to buy dips and the short-term needs of cash for large
margin requirements of various other sectors," said James Moore,
analyst at TheBullionDesk.com.
"The long-term picture is still very bullish, but we do
appear to be confused in the short term. We are looking for a
base building, enticing physical support back into the market
before we look to continue higher later in the year."
The euro surrendered gains and was little changed versus the
dollar after hitting a record high as European Central Bank
President Jean-Claude Trichet gave no fresh insight on the euro
zone's inflation and growth outlook.
The Bank of England made its third 25-basis-point cut in
five months, bringing its main interest rate to 5 percent on
Thursday while the ECB left rates on hold at 4 percent.
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 eased after rising closer to record highs, but was seen
supported by a sharp fall in U.S. crude and fuel stocks.
"Market sentiment is positive but the metal needs a period
of consolidation," said David Holmes, director of metals sales
at Dresdner Kleinwort investment bank.
"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.
VOLATILE MARKET
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 were little changed, with the most active
June contract <GCM8> trading $0.20 an ounce lower at $937.30.
"With such febrile financial markets, and gold ever more
reliant on investment demand as physical markets slow, the metal
is bound to remain volatile," Fortis Bank said in a report.
"Continuing bad news should support prices, but any signs
from April's G7 meeting of a stronger dollar would be a major
negative," it added.
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 $2,023/2,033 per an ounce from
$2,018/2,025 in New York.
Palladium <XPD=> rose $2 to $458/463 an ounce, but silver
<XAG=> fell to $18.05/18.10 an ounce from $18.15/18.20 late in
New York on Wednesday.
(Reporting by Atul Prakash; editing by Chris Johnson)
