(Updates to afternoon, adds comments)
By Chikafumi Hodo
TOKYO, Jan 8 (Reuters) - Gold posted modest gains on
Tuesday as oil prices recovered and analysts said a long-term
bullish trend in precious metals was drawing healthy fund
inflows on price dips.
As of 0345 GMT, gold <XAU=> had risen to $863.30/864.10 an
ounce from $859.70/860.40 late in New York.
"The long-term trend stays bullish. But the market is a bit
careful about buying aggressively due to uncertainty in
financial markets and recent sharp falls in U.S. stocks," said
Tetsu Emori, a fund manager at Astmax Co Ltd in Tokyo.
Concern that the U.S. economy is slipping into a recession
has hit share prices in recent sessions and prompted investors
to trim positions in riskier assets, including in commodities
markets.
COMEX gold futures prices advanced in Asia after settling
down $3.70 in New York on Monday.
The most-active February contract <GCG8> was trading up
$2.50, or 0.3 percent, at $864.50 from the New York settlement.
Tokyo traders said gold and other commodities prices tend
to be supported in January when investment funds allocate their
cash for different markets.
But gold could find its upside potential is limited in the
near term as investors appeared to be holding large buy
positions already.
COMEX gold fell on Monday after a buildup in speculators'
long positions in the gold futures market last week, which
signalled that the market could be vulnerable to a correction.
The Commodity Futures Trading Commission said in its latest
Commitments of Traders report that the noncommercial net long
position rose to 199,438 lots in the week up to Dec. 31, from
184,375 lots a week earlier. []
In Tokyo, the key December 2008 gold contract <0#JAU:> on
the Tokyo Commodity Exchange (TOCOM) ended the morning session
at 3,051 yen a gram, up 7 yen or 0.2 percent from Monday's
close of 3,044 yen. It had moved in a range of 3,032 to 3,053
yen.
U.S. crude oil futures rose on Tuesday, paring a loss of
more than $4 in the past three sessions as forecasts for an
extended decline in U.S. crude stocks last week provided
support.
Front-month U.S. crude for February delivery <CLc1> was up
53 cents at $95.62 a barrel in electronic trading, after
settling down $2.82 a day earlier.
The dollar staged a slight rebounded on Monday after some
traders were disappointed the weak payrolls report did not
spark a deeper retreat in the U.S. currency, prompting them to
reverse short positions.
A higher dollar makes gold, which is denominated in the
U.S. currency, more expensive for investors holding other
currencies.
Platinum edged up in line with sharp gains in Japanese
platinum futures.
Key TOCOM platinum for the December delivery finished the
morning trade up 45 yen or 0.9 percent at 5,278 yen a gram.
Short-covering lifted TOCOM prices after falling to a 2-
