* Gold buying increases as dollar slumps, oil rallies
* World Gold Council: Q1 demand up 38 pct on investment
* US auto emissions plan benefits platinum catalyst demand
(Recasts, updates with quotes, closing prices, changes
dateline to NEW YORK, previous LONDON)
By Frank Tang
NEW YORK, May 20 (Reuters) - Gold rose to an eight-week
high above $940 an ounce on Wednesday, bolstered by a rally in
oil and the dollar's slide to its lowest level in nearly five
months.
"Oil has reached the $60 mark. That is obviously a
bellwether and a key for commodities in general, so gold is
taking a cue from the strength in oil," said Brian Hicks, a
portfolio manager at U.S. Global Investors, which has more than
$2 billion in assets under management.
The weakness of the greenback, which makes gold and other
dollar-denominated commodities cheaper for non-U.S. investors,
sparked technical buying in the yellow metal, traders said.
Spot gold <XAU=> was at $938.15 an ounce at 2:20 p.m. EDT
(1820 GMT), up 1.5 percent from its late Tuesday quote of
$924.65 an ounce. Bullion hit a session high of $940.25, the
loftiest price since March 26.
U.S. gold futures for June delivery <GCM9> settled up
$10.70, or 1.2 percent, at $937.40 an ounce on the COMEX
division of the New York Mercantile Exchange.
Oil jumped above $62 a barrel on Wednesday to a new
six-month high on bullish U.S. inventory data and supply
concerns after a spate of refinery accidents. []
GOLD STOCKS RISE ON BETTER MARGINS
Gold mining stocks, measured by the Gold BUGS (basket of
unhedged gold stocks) index <.HUI>, rose over 5 percent on
gold's strength and an initial Wall Street rally.
"I think we are in for a period of stronger margins for
gold stocks," Hicks said. "You will see a re-rating of key
names, like Newmont and Barrick, as we get more buying from
generalists who have not participated in the gold market."
Gold demand rose 38 percent in the first three months of
2009, according to the World Gold Council (WGC), an
industry-sponsored trade group, as rising investment offset
weaker jewelry 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," Wozniak said. "I think overall the
uncertainty is going to remain for a while yet."
Meanwhile, 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.
U.S. President Barack Obama's long-term plan for cleaner
auto emissions boosted platinum's appeal as an auto catalytic
converter to clean exhaust fumes, analysts said.
[]
Platinum <XPT=> was at $1,145 an ounce, up 0.7 percent from
its late Tuesday quote of $1,137.50 late in New York, while
palladium <XPD=> was at $231.50 an ounce, just a tad higher
than its previous finish of $231. Silver <XAG=> was at $14.28
an ounce, up 0.9 percent from its previous finish of $14.15.
(With additional reporting by Jan Harvey; editing by Jim
Marshall))
