* Dollar falls to 4-mth low vs euro, oil hits 6-mth high
* World Gold Council says gold demand rose 38 percent in Q1
* But India's Q1 gold imports slide 83 percent
(Updates prices)
By Jan Harvey
LONDON, May 20 (Reuters) - Gold rose more than 1 percent to
an eight-week high of $940.25 an ounce on Wednesday, supported
by a slide in the dollar versus the euro and a jump in oil
prices to a six-month peak.
Prices were higher for much of Wednesday but jumped after
breaking through key technical resistance, identified by
analysts who study charts of past price movements, just below
$934 an ounce. Further resistance is seen at $951.
Spot gold <XAU=> was bid at $938.45 an ounce at 1416 GMT,
against $924.65 an ounce late in New York on Tuesday. U.S. gold
futures for June delivery <GCM9> on the COMEX division of the
New York Mercantile Exchange rose $12.30 to $939.00 an ounce.
"It is definitely one of the driving forces that the U.S.
dollar is weakening, particularly against the euro," said Peter
Fertig, an analyst at Quantitative Commodity Research.
"Also, firmer oil prices are usually regarded as a signal
that inflation might pick up. However, that risk currently is
rather small."
Strength in crude oil prices can also boost interest in
commodities as an asset class. Oil jumped above $61 a barrel on
Wednesday to a new six-month high on bullish inventory data and
a spate of refinery accidents in the United States. []
A slide in the dollar also helped gold. The U.S. currency
hit a four-month low versus the euro on Wednesday after U.S.
Treasury Secretary Tim Geithner said the financial system was
"starting to heal." []
RECOVERY
While gold is now benefiting from dollar weakness, analysts
say hopes for an economic recovery could limit its gains.
"I don't think (gold's rise) is sustainable as long as
sentiment stays as upbeat as it is," Commerzbank analyst Eugen
Weinberg said.
"Before, gold was considered as an insurance against risk.
People at the moment are not looking for insurance. Risk
aversion is disappearing, and people are becoming more upbeat
about the future."
Wall Street opened higher on Wednesday, with investors
optimistic the worst of the economic slowdown is abating. []
Gold demand rose 38 percent in the first three months of
2009, the World Gold Council said earlier, as rising investment
offset weaker jewellery and industrial usage. []
WGC investment research manager Rozanna Wozniak told Reuters
television she expects investment demand for gold to remain firm
as investors seek a safe store of value for their money.
"I have some concerns over how long these green shoots (of
recovery) will last," she said. "I think overall the uncertainty
is going to remain for a while yet."
Platinum and palladium, mainly used by carmakers as
components in autocatalysts, firmed, helped by rising gold
prices and upbeat sentiment as traders, refiners and miners met
for London's Platinum Week.
Refiner Johnson Matthey said in a key report on Monday that
strong Chinese jewellery demand was helping offset weakness in
automotive buying. []
Platinum <XPT=> was quoted at $1,153.50 an ounce against
$1,137.50 late in New York on Tuesday, while palladium <XPD=>
was at $233 against $231.
Prices of fellow platinum group metal rhodium <RHOD-LON>
rose $75 to $1,425 an ounce, and are up 7.5 percent so far this
week. Silver <XAG=> was at $14.35 an ounce against $14.15.
(Editing by Peter Blackburn)
