(updates with quotes, prices)
By Atul Prakash
LONDON, Jan 7 (Reuters) - Gold drifted further away from its
recent record highs on weaker oil prices and a rebound in the
dollar, but analysts said on Monday that sentiment was positive.
Concerns about U.S. economic growth, expectations for
further interest rate cuts and geopolitical tensions were likely
to keep prices well supported, with investors keen to buy on
price dips, they said.
"Gold is struggling to go to its all-time highs. It's more
likely for the metal to touch $830 an ounce before it goes to
$875 as we tend to get corrections after rapid run ups," Matthew
Turner, precious metals analyst at Virtual Metals, said.
"But it's hard not to be bullish in the medium term. I think
2008 would be a positive year for gold."
Gold <XAU=> fell as low as $855.20 an ounce and was quoted
at $860.00/860.70 by 1517 GMT, against $862.00/862.70 late in
New York on Friday and last week's historic high of $869.05. It
surged 32 percent in 2007 and has gained 4.5 percent this year.
The dollar rose after losses the previous session, as
investors trimmed bets against the currency given persistent
U.S. inflation pressures that may prevent the Federal Reserve
from cutting interest rates aggressively.
A firmer dollar makes gold costlier for holders of other
currencies and often lowers bullion demand. The metal is
generally seen as a hedge against oil-led inflation.
Oil rose above $98 a barrel before falling back as reports
of rising tensions in the Middle East outweighed concerns of
demand outlook in top consumer United States from a feared
economic recession.
Five Iranian Revolutionary Guard boats harassed and provoked
three U.S. Navy ships in the Strait of Hormuz, a major oil
shipping route off the Iranian coast, over the weekend, CNN
reported on Monday. []
OIL, DOLLAR WEIGH
"The combination of lower oil prices and a stronger dollar
may well see the gold price make its first examination of
support at $850," said Tom Kendall, precious metals strategist
at Mitsubishi Corporation.
"However, we expect any dollar rebound against the euro to
be short-lived and look for positive sentiment to come to the
fore again in gold before the end of the week.
In other markets, U.S. gold futures extended losses, with
the most active February contract <GCG8> down $1.5 at $864.20.
Trading volume in oil and metals on the Tokyo Commodity
Exchange, Japan's top commodities bourse, jumped about 19
percent on Monday compared with the daily average of last year
after the sessions were extended by two hours. []
The benchmark December gold contract in Tokyo <0#JAU:>
closed at a session high of 3,044 yen a gram, down 0.4 percent.
"Given the recent surge in metal prices, a period of
consolidation is healthy for the longevity of the current bull
trend," James Moore, metals analyst at TheBullionDesk.com, said
in a market report.
"With little improvement in the health of the U.S. economy,
interest rates still forecast to move lower, record oil prices
creating inflationary pressure and little improvement in the
geopolitical climate, gold should remain in a strong mood and
look to challenge $900 during the first quarter."
In market news, Turkey's gold imports rose 19.8 percent
year-on-year to 230.8 tonnes in 2007, posting the third largest
volume recorded, data from the Istanbul Gold Exchange showed.
[]
Platinum <XPT=> fell to $1,530/1,534 from $1,541/$1,545 an
ounce in New York on Friday, while palladium <XPD=> rose $5 to
$370/$373. Silver <XAG=> dipped to $15.23/15.28 an ounce from
$15.29/15.34 in the U.S. market.
(Additional reporting by Chikafumi Hodo in Tokyo)
(Editing by Michael Roddy)
