Gold slips below $800

Gold slipped below $800 an ounce on Thursday as the dollar rose, dulling the metal's attraction for non-US investors, but was locked in a tight range and supported by high oil prices, traders and analysts said. Spot gold slipped to $795.90/796.60 per ounce by 1501 GMT, compared with $803.70/804.40 late in New York on Wednesday.
Crude oil rose almost $2 towards $92 a barrel, enhancing gold's role as a hedge against inflation. In later trading, bullion prices were knocked as the dollar rose versus a basket of currencies on talk of US interest rate cuts - a move which made dollar-priced gold more expensive for non-US investors.
"Gold looks like it's in a $790-$808 range for now, although expect wide ranges ahead of year end as liquidity in all markets is trading at a premium," said Simon Weeks, director of precious metals trading at Bank of Nova Scotia. Gold prices have been increasingly volatile recently, having stalled twice in attempting to reach early November's 28-year peak of $845.40.
"This is a dollar move, and we expect that physical buyers will see the $800-790 range as an opportunity to get back into the market," a European dealer said. Analysts said that sharp moves either way could not be ruled out, with a further correction from the highs or a fresh attempt on November's peak both possible.
Investors will look to US jobs and homes sales data later on Thursday for further clues on the health of the economy and on prospects for further interest rate cuts.
In other bullion markets, Japanese gold futures rose as a weaker yen and solid cash gold encouraged buying. The October 2008 gold contract on the Tokyo Commodity Exchange ended 42 yen per gram higher at 2,879 yen.
Bullion prices also seemed to be winning the case for wider investment with bullion holdings in StreetTRACKS Gold Shares, which accounts for more than 80 percent of all such funds in the world, surging to a record 609.33 tonnes on Wednesday. In other precious metals, platinum rose to $1,443/1,447 per ounce from $1,436/1,440 in New York.
Dealers and analysts said supply worries were still providing residual support with an expected strike over safety in South Africa on December 4, although much of the impact had been factored into prices.
Palladium was marginally higher at $345/349 an ounce from $344/348 late in New York on Wednesday while silver eased to $14.17/14.22 an ounce from $14.40/14.45 an ounce. Investment bank UBS upwardly revised its platinum price forecast for 2008, to an average $1,450 per ounce from its previous $1,363.