Gold rose on Friday on a weaker dollar, bouncing from a one-month low hit earlier on concerns tough new proposals by President Barack Obama to limit banks' risk-taking may curb investment flows into commodities. Spot gold hit a one-month low of $1,081.90 and was at $1,095.30 an ounce at 1650 GMT, against $1,094.20 late on Thursday.
The dollar slipped as investors pared back riskier trades in the wake of Obama's proposals. A weaker US currency makes dollar-priced commodities cheaper for holders of other currencies. "We're seeing a rally in the euro which is helping gold a bit higher. Earlier the market was liquidating, partly because of a stronger dollar and partly because of President Obama's speech yesterday, said Afshin Nabavi, head of trading at MKS Finance.
-- Platinum, palladium fall more than 4 percent
Strategists and fund managers said Obama's plans, to restrict banks or financial institutions from investing in, owning, or sponsoring a hedge fund or a private equity fund, could constrain fund flows into commodity markets. Platinum and palladium prices fell more than 4 percent, also mirroring concern that the metals' run-up to their highest level since mid-2008 this week after the launch of new US investment products, may have been overdone.
Spot platinum was at $1,546 an ounce against $1,593 an ounce late in New York on Thursday, having earlier touched a low of $1,518, its weakest since January 6. Palladium hit a one-week low of $423.50 an ounce, and was later at $438 an ounce against $449. The launch of physically-backed platinum and palladium exchange-traded funds in New York earlier this month lifted prices as it boosted investment interest.
"It's not surprising to see a correction. The run up was so strong over the last weeks due to the high investment demand," said Eugen Weinberg, an analyst at Commerzbank. Palladium had been the year's best performer among precious metals, up 16 percent at its 2010 high of $471.75. Silver hit its lowest since January 4 at $16.83 and was later at $17.09 an ounce versus $17.35.
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