Gold extended gains on Thursday and held above $900 but investors may be careful about buying too heavily ahead of this week's US employment report, which may determine the metal's direction.
Gold hit a high of $903.80 an ounce, up from $898.00/898.80 an ounce late in New York on Wednesday, when the metal jumped more than 1 percent after oil surged almost $4, boosting its appeal as a hedge against inflation.
There was a lack of follow-through buying at the high levels, especially from Japanese investors, and gold was likely to trade in a narrow range before the release of the US jobs data, dealers said. "Maybe the market still needs to consolidate around these levels, and we see some resistance around $908 level," said Louis Lok, a dealer at Bank of China in Hong Kong.
"There may be some profit taking before the figure is out. There's not much follow-through buying after New York closed," he said. Gold has rebounded more than 3 percent since falling to a two-month low of $872.90 on Tuesday, but it was still well below a record high of $1,030.80 hit on March 17.
Other precious metals also firmed, with platinum rising more than 1 percent as worries about supplies lingered in main producer South Africa. "There's still a possibility for gold prices to recover further at some point in the coming quarter," said David Moore, an analyst at Commonwealth Bank of Australia in Sydney.
"A lot would depend on the trends in the US dollar and also I think the market will be watching the Fed action in coming months. I think the prices could sort of hold roughly around the current levels in the near term." The dollar jumped to a three-week high against the yen on optimism the worst of the credit crisis may be over despite remarks by Federal Reserve Chairman Ben Bernanke, which raised hopes of more interest rates cuts later this month.
"I think we just have to wait for the data on Friday. There's a chance the Fed will cut the rates again in April," said a dealer in Hong Kong. Friday's US employment report is expected to show the economy shed jobs in March for a third straight month.
The Fed has cut its benchmark interest rate six times since September, bringing it to 2.25 percent from 5.25 percent. Lower rates boost gold's appeal as an alternative investment. Crude oil steadied near $105 a barrel on Thursday after a jump in the previous session, when United States government data showed a draw in US gasoline inventories.
Gold futures for June delivery on the Comex division of the New York Mercantile Exchange added $4.7 an ounce to $904.9 an ounce. Spot platinum rose to $1,967/1,977 an ounce from $1,942/1,952 an ounce. Platinum extended gains on worries that South Africa's power crisis, which had disrupted mining, may last many years unless electricity demand reduced.
Despite the gains, platinum remained below a record of $2,290 hit on March 4. The most active Tokyo platinum futures firmed 136 yen per gram to 6,400 yen. Silver edged up to $17.18/17.23 an ounce from $17.17/17.22 an ounce. Spot palladium rose to $442/447 an ounce from $436/441 an ounce.