Gold firmed and held above $800 an ounce on Thursday, regaining strength as worries over credit markets and slowing US growth raised its appeal as an alternative investment. Spot gold rose to 804.70/805.40 dollars an ounce from 799.80/800.50 dollars late in New York, when it gained nearly 6 dollar on a tumbling dollar and near-record crude oil.
Koji Suzuki, a market analyst at Kazaka Commodity Co Ltd, said the gold market was focused on how the currency and crude oil markets were likely to move after traders returned from this week's holidays. US markets are closed on Thursday for the Thanksgiving holiday, while those in Japan will be closed on Friday for a national holiday.
"Whatever happens gold prices will be stuck at high levels," Suzuki said. Dealers pegged immediate resistance at 809 dollars, with near-term support levels seen at 797 dollars and 780 dollars. Charts indicated gold was moving away from oversold territory and heading towards a 28-year high of $845.40 hit on November 7.
Suzuki said gold's fortunes were likely to be increasingly determined by crude oil's strength. Gold has historically received a boost from high oil prices as some investors look to the metal as an inflation hedge. "I think there is a sense of fatigue about having the dollar dictate direction," Suzuki said.
The dollar hit a record low against the euro and a basket of currencies on Thursday as expectations for a further Federal Reserve interest rate cut were reinforced by the central bank's projection that United States economic growth will slow next year.
The euro hit a record high of $1.4873 on electronic trading platform EBS in the day. But the dollar fared better against the yen, pushing up from a 2-year low hit the previous day. The dollar rose to 108.99 yen, pulling away from the 2-year low of 108.25 yen hit on EBS on Wednesday.
US light crude for January delivery gained 25 cents to $97.54 a barrel. It sprinted to a new record of $99.29 in the previous session. The benchmark October 2008 gold futures on the Tokyo Commodity Exchange rose 10 yen per gram, or 0.4 percent, to finish at 2,846 yen, after wavering between 2,814 yen and 2,852 yen.
Gold demand for jewellery and investment jumped in India, China and other Asian countries in the third quarter of 2007 despite high prices, driven by strong economic growth and firm local currencies. China's jewellery demand jumped 24 percent to 74.8 tonnes in the third quarter, when gold recaptured $700 and began the uptrend.
Investment demand in China, the world's third largest consumer, rose 46 percent to 4.1 tonnes. Silver was at 14.48/14.52 dollars an ounce, a touch above late New York levels of 14.47/14.51 dollars. Platinum gained to 1,467/1,472 dollars an ounce from 1,461/1,465 dollars an ounce.
Palladium was at $355/359 an ounce compared with $354/358. The most-active December gold contract on the Comex division of the New York Mercantile Exchange added 6.1 dollars to 804.7 dollars an ounce on electronic trade.