* Gold boosted as oil nears $70 on optimism, Goldman view
* Dollar drops after ECB's Trichet says keeps rate steady
* Inflation worries, economic optimism support bullion
(Recasts, updates with quotes, closing prices, market
activity, changes byline, previous dateline LONDON)
By Frank Tang
NEW YORK, June 4 (Reuters) - Gold futures rose nearly 2
percent on Thursday, reversing the previous session's sharp
decline, as a bullish oil-price forecast by Goldman Sachs
ignited a commodities rally and boosted inflation-hedge
buying.
Platinum group metals and silver also posted solid gains as
a fresh 2009 peak in crude oil prices and the weakening U.S.
currency boosted dollar-denominated commodities across the
board. The Reuters/Jefferies CRB index <.CRB> jumped 2.6
percent.
"It's predominantly the oil. That's the overall story to
this level. It has contributed to the weakness in the dollar
and it has provided support on almost every major break" in
gold, said Frank McGhee, head precious metals trader with
Integrated Brokerage Services.
Earlier in the year, gold prices suffered as deflation
fears amid the worst economic crisis since the Great Depression
dented bullion's status as an inflation hedge.
However, recent signs of economic recovery, combined with a
crude oil rally and renewed worries about excess liquidity from
aggressive government stimulus programs, have spurred
investment demand in gold.
U.S. August futures <GCQ9> settled up $16.70, or 1.7
percent, at $982.30 an ounce on the COMEX division of the New
York Mercantile Exchange.
Spot gold <XAU=> was at $980.20 at 2 p.m. EDT (1800 GMT),
against its late Wednesday quote of $962.15 an ounce.
Oil rose above $69 a barrel after U.S. jobs data showed a
fall in jobless claims. Rising crude prices help boost interest
in commodities as an asset class, and prompted fresh gold
buying to hedge against oil-led inflation. []
Goldman Sachs <GS.N> raised its end-of-2009 oil price
forecast to $85 a barrel from $65 and introduced a new
end-of-2010 forecast of $95 based on the continued recovery in
economic activity, the U.S. bank said in a research note.
[]
"As the investing public read that Goldman Sachs is setting
$85 a barrel crude oil for 2009, that encouraged people to
re-enter the gold market," said George Nickas, commodities
broker at FC Stone.
Gold was also boosted by currency moves, as the euro rose
against the dollar as ECB President Jean-Claude Trichet
signaled the central bank will keep interest rates steady for
some time. []
ETF HOLDINGS DROP
On the investment side, the bullion market largely ignored
the news that holdings of the world's largest gold-backed
exchange-traded fund, New York's SPDR Gold Trust, posted a
small 1.5-tonne fall on Wednesday. []
Silver <XAG=> was at $15.87 an ounce, up 3.7 percent from
its previous finish of $15.30, tracking moves in the gold and
precious metals market.
Platinum <XPT=> was at $1,272 an ounce, up 3.1 percent from
its late Wednesday quote of $1,233.50, while palladium <XPD=>
was at $252 an ounce, up 4.8 percent from its previous finish
of $240.50, both benefiting from fund buying. ETF Securities
said its silver and palladium ETF holdings both hit record
levels on Wednesday. []
Goldman Sachs said U.S. auto sales were likely to improve
in the second half of 2009. []
(Additional reporting by Jan Harvey; editing by Jim Marshall)
