Gold marched higher on Friday in volatile conditions, with prices spiking above $815 per ounce as bulls focused on poor dollar sentiment for a fresh assault on recent 28-year highs.
Platinum prices also perked up, with a planned national safety strike in key producer South Africa and further shaft closures due to accidents boosting prices near to record highs hit earlier this month.
Activity remained thin, amplifying volatility, after the US market closure for Thanksgiving Day on Thursday and a national holiday in Japan on Friday. Spot gold rose more than 1.5 percent to an intraday high of $817.40 before paring gains to stand at $815.20/815.90 per troy ounce by 1518 GMT from $802.70/803.50 quoted late in London on Thursday.
The market hit a 28-year high in early November at $845.50, just shy of a record $850 hit in January 1980. The euro set fresh record highs versus the dollar, moving closer to the landmark $1.50 level, on raised bets for the US Federal Reserve to cut interest rates next month. Even though the single currency later retreated from the peaks, a poor backdrop for the dollar was seen bolstering investor confidence in bullion markets.
"I don't think we are getting anywhere close to the peak in this gold market," said Graham Birch head of BlackRock's London-based Natural Resources Equity team in a briefing on Friday. A cut in US borrowing costs is seen loading downward pressure on the dollar as it dents the currency's yield appeal, making gold cheaper for non-US buyers.
Bullion's safe-haven properties were also still being magnified by concern over slowing economic growth stemming from the crisis in credit markets. "The world seems to be universally bearish on the dollar and year-end is looming. The year doesn't end on December 31 - it ends on about December 10 for most traders," said Ross Norman, analyst at TheBullionDesk.com.
"The market is now slowly making its way back up. It does seem as if gold wants to have another go at the $850 level and I suspect we'll see a move over the next few days," he added.
PLATINUM BOOST: In other bullion markets, the December COMEX gold futures contract was up $15.7 at $814.30, having spiked more than 2 percent earlier. Platinum prices got an early boost on news that South Africa's National Union of Mineworkers (NUM) plans to ask its members to down tools on December 4 to protest against a spate of deaths in the country's mines.
"The big story all year has been supply disruptions and most of those have taken place in South Africa, so this is all adding to the various issues we have seen," Barclays Capital analyst Suki Cooper said. Platinum rose to $1,475/1,479 an ounce from $1,466/1,471 quoted late in London on Thursday, closing in on a record $1,484 seen earlier this month.
More than 180 workers have been killed this year in rock-falls, explosions or buried underground during earth tremors in mines owned by some of the world's biggest mining firms. Around 200 workers were killed in mines last year.
A strike could cripple big miners, including gold producers AngloGold Ashanti, Gold Fields, Harmony and the world's top two platinum producers Anglo Platinum and Impala Platinum, all of which have had accidents or deaths at their mines in recent weeks.
In other precious metals, silver held firm in line with gold at $14.63/14.67 an ounce compared with $14.51/14.56 in London late on Thursday. Palladium stood at $351/355 an ounce from $347/352.
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