(Recasts with comment, prices, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, June 9 (Reuters) - Gold rose to its highest level
since late May on Monday as the dollar hit a six-week low
against the euro, fuelling buying of the precious metal as a
currency hedge.
Gold <XAU=> touched an intraday high of $908.70 an ounce,
its strongest level since May 28, before slipping back to
906.20/907.20 at 1023 GMT, up from $896.80/898.20 late in New
York on Friday.
Gold traders are closely monitoring movements on the foreign
exchange markets, with sentiment cautious after last week's
fluctuations.
"Euro/dollar will remain the key element for trading," said
Frederic Panizzutti, an analyst with MKS Finance. "The markets
remain a bit more cautious after the quite volatile trading seen
last week."
"Should the dollar not weaken further, we may see a break
back below $900," he added.
Platinum also posted gains, rising to its highest level in
almost two weeks as it tracked gold higher and amid supply
concerns from major producer South Africa.
Investors are turning to precious metals amid fears the
dollar may have further to weaken after poor U.S. data last
week, analysts said.
"A lot of the pullback in commodities was based on the view
that the dollar was getting quite close its weakest point (but)
suddenly there has been some more poor data," said Numis
Securities analyst Simon Toyne.
"Weak data from the U.S. is seen as positive as it weakens
the dollar," he said.
The dollar extended losses against the euro this morning,
having slipped sharply on Friday after data showed U.S.
unemployment jumped to 5.5 percent in May, denting hopes for a
hike in U.S. interest rates. []
The euro meanwhile is benefiting from European Central Bank
president Jean-Claude Trichet's suggestion last week that euro
zone rates are likely to be raised.
But oil prices, which also helped drive gold higher on
Friday as they rose to new records, are easing this morning as
traders take profits after Friday's record high, lessening
support for gold. []
The precious metal tends to move in line with crude prices,
as it is bought as a hedge against oil-led inflation.
But overall gold traders are likely to continue to take
their cues from the foreign exchange markets, analysts said,
with sentiment still cautious ahead of a raft of U.S. data this
week.
Platinum meanwhile was steady after touching its highest
level in almost two weeks earlier on Monday. The white metal is
taking support from expectations supply from South Africa will
remain lacklustre this year as the republic grapples with power
problems.
South Africa is the world's biggest producer of platinum,
supplying some four out of every five ounces consumed each year.
"(The) market expects new power cuts in South Africa as the
country heads into winter," said Fairfax analyst John Meyer in a
note. "Lonmin and other producers (are) struggling to meet
production targets.
Spot platinum was steady at $2,059.50/2,079.50 against
$2,064/2,084 in late New York trade Friday. Earlier it touched
an intraday high of $2,086.
Silver <XAG=> was little changed at $17.55/17.60 against
$17.51/17.57, while palladium <XPD=> rose to $430.50.00/440.50
an ounce from $429.00/437.00.#
(Reporting by Jan Harvey; editing by Christopher Johnson)
