(recasts, adds quotes, changes prices, pvs SINGAPORE)
By Atul Prakash
LONDON, Jan 10 (Reuters) - Gold softened in choppy trade on
Thursday but held near record highs, with dealers expecting the
market to undergo a period of consolidation before hitting the
$900 an ounce target.
Spot gold <XAU=> fell to $874.25/875.00 an ounce by 1113 GMT
after rising as high as $883.60, against $877.70/878.50 late in
New York on Wednesday, when it rose to a record high of $891.40.
"Gold prices appear to be largely taking their direction
from dollar movements and investment demand is likely to
continue to underpin prices," Suki Cooper, precious metals
analyst at Barclays Capital. said.
"Safe-haven buying, triggered by inflationary concerns,
geopolitical tensions and broader market concerns, has the
potential to buoy prices further in the forthcoming weeks," she
said, but added the metal might consolidate in the near term.
Gold, which gained more than 30 percent in 2007, entered the
new year on a firm note, rising 6 percent on speculative buying
ignited by a struggling dollar and record high crude oil prices.
Oil fell below $95 a barrel on Thursday as a rise in fuel
stocks in top consumer the United States offset a steep fall in
supplies. The dollar was marginally lower against the euro.
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.
"Technically, gold is still very much biased to clock new
highs. Momentum is showing no signs of cooling and any pullback
would ideally trigger fresh buying interest," said Pradeep Unni,
an analyst at Vision Commodities in Dubai.
"The next probable stop for gold is around $920 and that is
likely to be witnessed before the Fed decision or immediately
after that," he added.
Recent grim U.S. manufacturing and employment data has
intensified the likelihood the U.S. Federal Reserve will cut
interest rates by half a percentage point later this month.
Markets await Fed Chairman Ben Bernanke's first comments on the
economy in 2008 on Thursday.
LONG-TERM TREND
In other bullion markets, Shanghai gold futures <0#SHAU:>
fell 3.7 percent as some investors sold positions a day after
the contract rallied 6.3 percent at its debut. []
Tokyo gold futures reversed gains on firming yen <JPY=> and
profit taking. The key gold futures contract for December 2008
delivery <0#JAU:> ended 17 yen per gram lower at 3,117 yen.
U.S. gold futures also gave up early gains, with the most
active February contract <GCG8> down $5.3 an ounce at $876.4.
But gold was expected to jump in the longer term.
"We forecast that gold can trade higher from current levels
and see the metal trading to as high as $1000/oz at some point
this year," John Reade, head of metals strategy at UBS
Investment Bank, said in a market report.
"But we also see gold ending 2008 somewhat lower than
current levels due to our view that the dollar will firm in the
second half of 2008, at least against European currencies.
In industry news, South Africa's gold output fell 12.7
percent in November from a year earlier, tightening supplies in
the world's top producer of the metal. []
Gold production has been on a downward slope in South
Africa, tumbling by over 50 percent over the past decade, as
high-grade mines run out of ore and firms grapple with more
difficult and high-cost underground operations.
Platinum <XPT=> dipped to $1,540/1,543 from $1,550/1,554 an
ounce in New York on Wednesday, when it hit a record of $1,560.
Palladium <XPD=> dropped to $372/375 an ounce from $373/377,
while silver <XAG=> fell to $15.56/15.61 from $15.67/15.72.
Polymetal <PMTLq.L>, the world's fifth-largest silver miner,
said it had ended a long-term hedging agreement that had limited
profits by requiring it to sell most of its silver at below
market price. []
(Additional reporting by Lewa Pardomuan in Singapore)
(Editing by Michael Roddy)
