Gold rose to its highest level since late May on Monday as the dollar hit a six-week low against the euro, fuelling buying of the precious metal as a currency hedge. Platinum also posted gains, rising to its highest level in almost two weeks as it tracked gold higher and amid supply concerns from major producer South Africa.
Spot gold touched a high of $908.70 an ounce, its strongest level since May 28, before slipping to 899.25/890.45 at 1459 GMT from $896.80/898.20 late in New York on Friday. Traders said a firmer dollar after above consensus home sales data in the United States briefly pushed prices to below Friday's levels.
Gold traders closely watching foreign exchange markets, with sentiment cautious after last week's fluctuations. "Euro/dollar will remain the key element for trading," said Frederic Panizzutti, an analyst with MKS Finance.
"The market remains a bit more cautious after volatile trading seen last week. Investors are turning to precious metals amid fears the dollar may have further to weaken after disappointing US jobs data last week, analysts said. "A lot of the pullback in commodities was based on the view that the dollar was getting quite close to its weakest point (but) suddenly there has been some more poor data," said Numis Securities analyst Simon Toyne.
Platinum meanwhile was steady after touching its highest level in almost two weeks. The white metal is taking support from worries about supplies from South Afrcia as the republic grapples with power problems. South Africa is the world's biggest producer of platinum, supplying some four out of every five ounces consumed each year.
"(The) market expects new power cuts in South Africa as the country heads into winter," said Fairfax analyst John Meyer in a note, adding that London-listed miner Lonmin and other producers (are) struggling to meet production targets.
Spot platinum was at $2,047/2,067 an ounce against $2,064/2,084 on Friday. Earlier it touched a high of $2,086. Silver slipped to $17.31/17.37 against $17.51/17.57, while palladium softened to $426/434 an ounce from $429.00/437.00.
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