* Gold hits one-week high as investors return
* Buying spree prompts US Mint to suspend Eagle gold coins
* Soft dollar, higher oil prices boost gold
(Recasts, updates prices, market activity to New York close,
adds report of U.S. Mint suspending American Eagle coin sales)
By Pratima Desai and Anna Stablum
LONDON, Aug 21 (Reuters) - Gold prices hit a 10-day high on
Thursday, lifted by investor buying as oil prices rose, the
dollar slipped, equities fell and the U.S. Mint suspended
American Eagle bullion coin sales, citing soaring demand.
Gold <XAU=> rose to $839.00 an ounce, the highest since
August 11, and was at $832.40/833.40 by New York's last quote
at 2:15 a.m. EST (1815 GMT), up from $810.35/811.75 an ounce
late in New York on Wednesday.
Buying momentum in the gold market improved after the U.S.
Mint temporarily suspended sales of its American Eagle bullion
coins due to a shortage of the popular coins as demand soared
following a recent sharp retreat in gold prices.
"Due to the unprecedented demand for American Eagle gold
one-ounce bullion coins, our inventories have been depleted.
We are therefore temporarily suspending all sales of these
coins," the U.S. Mint told authorized coin dealers in a
memorandum.[]
U.S. gold futures for December delivery <GCZ8> settled at
up $22.70, or 2.8 percent, at $839.00 an ounce on COMEX.
In addition, a softer dollar and geo-political concerns
were the key drivers behind the short-term correction within
what is an overall bear market, said Dresdner Kleinwort
consultant Peter Fertig.
"In the medium term, the dollar is going to strengthen
again against the euro and that is going to weigh, not only on
crude oil, but also on gold," he said.
Oil <CLc1> ended up more than $5 at $121.18 a barrel, after
Russia responded angrily to a U.S. missile shield agreement
with Poland, raising the threat of a supply disruption from the
huge energy producer. []
"Oil prices at current levels could attract further
investment fund flows into precious metals," Standard Bank said
in a note, adding that technical signals indicated precious
metals were due for a correction.
The firmer dollar in recent months has pulled gold down by
around 20 percent from its all-time high of $1,030.80 an ounce
hit in March, and a lower price has attracted buying.
Demand for gold in top consumer India fell sharply after
prices hit a record but as the country heads into the festival
and wedding season, demand will rise.
"There are signs that physical demand is rising sharply in
response to low prices," said Eugen Weinberg, commodities
analyst at Commerzbank.
"Indian demand should rise rapidly over the next few
months, especially with the country's main religious holidays
approaching, which should provide an additional boost."
A weaker U.S. currency makes commodities priced in dollars
cheaper for holders of other currencies. Investors also use
gold as a hedge against financial turmoil and inflation, often
triggered by high oil prices.
In platinum, palladium and silver, market watchers also
view the recent sell-off as overdone and expect a bounce.
But over the longer term, analysts expect platinum's
fortunes to be tied to the health of the global car industry,
which has experienced sharply declining sales.
Spot platinum <XPT=> ended firmer at $1,449.50/1,469.50 an
ounce from $1,368.50/1,388.50 an ounce late on Wednesday.
Earlier, it rose to an intra-day high of $1,454 -- the
highest since Aug. 15.
Palladium <XPD=> was higher at $286.00/294.00 from $281/289
and silver <XAG=> rose to $13.82/13.88, up 5 percent, from its
previous U.S. close of $13.15/13.21. Silver hit an intra-day
high of $13.87 -- the highest since August 15.
(Additional reporting by Frank Tang in New York; Editing by
David Gregorio)
