Gold higher on oil

Cash gold edged higher on Thursday, bolstered by inflation concerns provoked by high oil prices, and Tokyo gold futures followed it higher by the close. But analysts said chances seemed slim for further gains in bullion beyond a key resistance without any fresh news.
"A consensus is that gold is on the rise in the long run," said Naomi Suzuki, senior analyst at Sumitomo Corp's research team. "But it looks difficult for it to decisively break through above $670 (an ounce)," she said, noting the long futures positions being piled up in the New York market.
She also said that concerns about central bank selling have not been fully factored in and that the recent firmness in global equity markets has made gold less attractive to investors who look for higher returns in the short term.
US stocks fell on Wednesday, when data showing higher-than-expected US labour costs stoked worries about inflation and interest rates, causing a drop in US stocks.
But Standard & Poor's 500 stock index has risen 7 percent in the year to date, compared with 5.5 percent gain in cash gold. As of 0722 GMT, cash gold was at $671.20/672.70 an ounce, compared with $669.20/670.70 in New York. On Tuesday, gold climbed as high as $673.95, the highest since May 14, helped by a fall in the dollar.
The currency market failed to give gold traders any clear clues. The euro was little changed from late New York trade near $1.3505 on Thursday after the European Central Bank raised its key rate as expected to 4 percent on Wednesday but did not clearly suggest how much interest rates will rise further.
Oil prices extended gains above $71 a barrel on Thursday, nearing their highest in nine months after a raid by Turkish troops into northern Iraq revived Middle East geopolitical jitters.
The TOCOM benchmark gold futures contract for April 2008 delivery reversed early losses to close up 4 yen a gram, or 0.2 percent, higher at 2,652 yen. On Tuesday it rose as high as 2,664 yen, the highest in nearly a month. In industry news, Australian gold producer Newcrest Mining Ltd said it was considering closing out its gold hedge book and looking at its gearing levels as part of a review of its capital structure.
The news suggested producer de-hedging would continue apace this year and provide support to the gold market. Hedging allows producers to lock in profits for future output, but it can backfire if metals prices rise above the hedged price.
Cash platinum firmed o $1,299/1,304 an ounce from $1,290/1,295 in New York. Spot palladium was at $368/372 an ounce, compared with $366/369 in New York. Silver was at $13.69/13.72 an ounce, barely changed from $13.68/13.72.