*Gold ticks higher in line with firmer oil price
*Dollar weakens a touch against the euro
*Platinum steadies after sharp fall
(Recasts, updates throughout, pvs SINGAPORE)
By Jan Harvey
LONDON, July 28 (Reuters) - Gold edged higher in Europe on
Monday in line with firmer oil prices and as the dollar weakened
a touch against the euro, boosting bullion's appeal as a
currency hedge.
However, the precious metal is expected to remain rangebound
as the market takes a breather after Friday's volatile session,
with traders eyeing an initial target of $935 an ounce.
Gold <XAU=> rose to $929.00/930.00 an ounce at 0911 GMT from
$927.40/929.40 late in New York on Friday, when it moved in
volatile $16 range.
"This is the effect of the weaker US dollar and stronger
oil, and also fears over inflation," said Commerzbank analyst
Eugen Weinberg.
The rescue package for U.S. mortgage agencies Fannie Mae
<FNM.N> and Freddie Mac <FRE.N> approved by the Senate over the
weekend had reignited fears over rising prices, he said. Gold is
often bought as a hedge against inflation.
Oil ticked higher after sliding around $20 a barrel in the
last two weeks, boosting interest in gold as an inflation hedge,
and in commodities as an asset class.
Crude futures rose above $124 a barrel on Monday amid
technical buying and short-covering after recent declines left
the market oversold. []
The dollar also weakened a touch against the euro, adding to
the appeal of gold as an alternative investment. []
Gold shrugged off the effects of a spate of bombs in India
over the weekend and two blasts in Istanbul on Sunday, which
killed 13. It typically benefits from rising geopolitical
tensions, as it is often bought as a safe haven from risk.
[]
TheBullionDesk.com analyst James Moore said he was
"surprised" that prices failed to rally on the news from Turkey.
"Gold is a safe haven and it didn't react, which is a little
bit of a short-term bear signal," he said. "Short term, it looks
like the risks are on the downside."
PLATINUM STEADY
Among other precious metals, platinum steadied after a
second week of decline.
"It seems as if the selling of the past week has stopped and
the metal might consolidate at current levels," said analyst
Manqoba Madinane at Standard Bank in Johannesburg.
"Primary support and resistance levels are at $1,755 and
$1,762 respectively today."
The metal has been pressured by fears over weakening demand
as the U.S. and global economic outlook darkened and amid
speculation over the financial health of carmakers in the U.S.
and Japan.
Platinum is widely used by the car industry in
autocatalysts. Any sign of a slowdown in the automotive sector
could hit platinum demand hard.
Supply fears linked to a power shortage in South Africa also
eased after the country's state power utility Eskom said it sees
no further powercuts this year.
The world's top platinum producer AngloPlatinum <AMSJ.J>
said on Monday it will meet its annual production target of 2.40
million ounces -- against 2.47 million last year -- and expects
output to increase significantly in the second half.
[]
However, after a sell-off that has seen prices dip some 14
percent in two weeks, some analysts fear the market is oversold.
Spot platinum <XPT=> was unchanged at $1,745.00/1,765.00
late in New York.
Spot palladium <XPD=> rose to $385.00/393.00 an ounce from
$380.50/388.50 late in New York. Silver <XAG=> edged up to
$17.43/17.48 an ounce from $17.35/17.43 late in New York.
(Reporting by Jan Harvey; Editing by Peter Blackburn)
