By Atul Prakash
LONDON, Jan 24 (Reuters) - Gold rose more than 1 percent to
trade near $900 an ounce on Thursday as firmer oil prices and a
recovery in global equity markets boosted buying, analysts said.
Spot gold <XAU=> hit a high of $895.60 an ounce and was
quoted at $894.30/895.00 by 1122 GMT, against $884.75/885.45
late in New York on Wednesday and this week's three-week trough
below $850. It hit a record high of $914 this month.
"We believe that things have settled in the equity market.
Obviously there are still fears around, but it's definitely less
than it was," said Walter De Wet, precious metals analyst at
Standard Bank.
"There is still a lot of nervousness. I wouldn't get all
excited and say that we are going towards new record highs.
Till the end of the month, gold would probably rise slightly
towards $900, mainly on the back of growing expectations that
the Fed will cut rates."
The Fed on Tuesday cut benchmark interest rates by
three-quarters of a percentage point -- the biggest rate cut in
more than 23 years -- in an emergency bid to boost a U.S.
economy that some fear is on the verge of recession.
Fed policy makers are scheduled to meet on Jan. 29-30.
The bullion market keenly watched the stock market, with
Britain's leading share index rebounding more than 3 percent in
early business, tracking sharp gains on Wall Street on hopes of
a U.S. government plan to rescue ailing bond insurers in a bid
to stem more credit losses.
POSITIVE FACTORS
Gold fell sharply earlier this week with a decline in
equities, as investors sold to cover margin calls.
"The situation of financial institutions is likely to
improve and this might stabilise stock markets, which would be
positive for gold," Dresdner Kleinwort said in a report.
"It would not only be positive for gold as investors stop
selling gold to cover losses of other assets, but also via a
weaker U.S. dollar and rebounding crude oil prices."
Oil rose near $88 a barrel, after a late surge in U.S. stock
indices helped cool simmering fears of a recession in top energy
consumer the United States.
Gold is generally seen as a hedge against oil-led inflation
and often moves in the opposite direction of the dollar.
A Reuters global poll of 50 traders and analysts forecast
average gold prices surging more than 20 percent this year and
gold retaining most gains in 2009 as dollar weakness, market
turmoil and inflation fears stoke investor interest.
[]
In industry news, Peter Hambro Mining <POG.L>, Russia's
second-largest gold miner, said it will take a year longer than
planned to more than triple output to 1 million ounces as a
large new deposit is bigger than expected. []
Platinum <XPT=> jumped to $1,586/1,591 an ounce, from
$1,551.50/1,556.50 late in New York, after Lonmin Plc <LMI.L>,
the world's No.3 platinum producer, cut its sales outlook for
the year. []
Its first-quarter refined platinum output slid by nearly a
fifth due to safety shutdowns and continued processing problems.
Silver <XAG=> rose to $16.28/16.33 from $15.97/16.02 an
ounce, while palladium <XPD=> was up at $367/372 an ounce,
versus $362.50/367.50.
(Additional reporting by Lewa Pardomuan in Singapore)
(Editing by Michael Roddy)
