* Gold hits four-day high as dollar slides to 2009 low
* Month-end positions squaring, improved U.S. data hurt
dollar, help precious metals
* AngloGold Ashanti says will miss output target in 2009
(Recasts with New York prices, comment, adds to byline,
dateline)
By Carole Vaporean and Jan Harvey
NEW YORK/LONDON, July 31 (Reuters) - Gold posted steep
gains on Friday rallying to a three-day high when the dollar
slid to its lowest level in 2009 amid month-end position
squaring and improved economic readings in the United States.
Traders said, better-than-forecast second quarter U.S. GDP
and Midwest manufacturing data increased investor risk
appetite, compelling them to exit dollars and buy commodities.
Spot gold <XAU=> hit a peak of $956.20 an ounce, nearly
matching Tuesday's high preceding three days of heavy selling.
It remained strong into late New York dealings at $953.75 an
ounce, up sharply from $933.30 an ounce late on Thursday.
U.S. December gold <GCZ9> settled with $18.50, or 1.97
percent, gains at $955.80 an ounce on the COMEX division of the
New York Mercantile Exchange.
The dollar fell to its lowest for the year, weighed down by
investors squaring up positions at month-end, steady share
prices, and data showing an unexpectedly small contraction in
the U.S. economy, which boosted risk appetite. []
"You can't separate gold from the dollar at the moment. The
dollar is the primary driver for these things right now. And a
Friday afternoon in the summer is the thinnest market. So any
kind of big action and the market moves more than it would when
all participants are in," said Miguel Perez-Santalla, vice
president of sales and marketing at Heraeus Precious Metals
Management in New York.
Dollar weakness makes gold cheaper for holders of other
currencies, lifting prices.
The dollar was hit when data released showed the U.S.
economy contracted at a slower-than-expected pace in the second
quarter, which analysts said reinforces the view the recession
is winding down. []
"The U.S. GDP data was fairly good; it is still contracting
but at a much slower pace, much better than the first quarter,"
said Andrey Kryuchenkov, an analyst at VTB Capital.
Later, the Institute for Supply Management-Chicago said its
index of Midwest business activity rose in July to 43.4 from
39.9 in June, another sign of economic improvement that
unraveled dollar positions and helped gold. []
COMEX December gold rallied to resistance at $960.00 an
ounce, its highest since Monday. But its failure to breach that
level amid lack of physical buying caused some participants to
predict corrective selling on Monday.
* "It didn't break above the $960 level on the December
contract. That's a significant number, which to me signals it
ran out of steam at that point, and I would expect a correction
next week," said Perez-Santalla.
Underlying demand for gold remains weak, with a pick-up in
sales in leading gold market India midweek tailing off towards
the weekend and flows into gold-backed exchange-traded funds
still stagnant. [] []
But a World Gold Council official told Reuters India's gold
demand may pick up from August as pent-up demand is seen
boosting sales. []
TARGET MISSED
Meanwhile Africa's top gold producer AngloGold Ashanti said
it will miss its output target for the year, adding that it
will wind up its hedge book of forward sales by 2014.
[]
Precious metals across the board benefited from the
dollar's steep declines. Spot silver <XAG=> was up sharply at
$13.90 an ounce from $13.45 an ounce in Thursday's late quote
after hitting a three-day peak at $13.97.
Platinum <XPT=> jumped to $1,206 from $1,180.0 an ounce in
late Thursday trade. Spot palladium <XPD=> climbed to $261.0
from $257 an ounce in late Thursday business.
(Additional reporting by Martina Fuchs in London, Editing by
Marguerita Choy)
