Gold jumped almost 6 percent to its highest in a month on Friday, buoyed by a weakening dollar and rising oil prices while other precious metals rallied, tracking bullion's gains. Spot gold rose to $789.55 an ounce, its highest since October 21 and was at $786.05 an ounce by 1549 GMT, versus $745.10 an ounce in New York late on Thursday.
"We're seeing a rally supported by the weakening dollar," Suki Copper, analyst at Barclays Capital, said. The dollar fell as global stocks rebounded. Early in New York, the euro was up 0.9 percent at $1.2575 although it was off a $1.2640 session high. Gold tends to move in the opposite direction to the dollar, as a strong US currency makes bullion more expensive for local currency holders.
"We have not seen a huge change in fundamentals. The World Gold Council report certainly supports from a demand perspective. We think on the back of strong jewellery demand the downside should be cushioned for gold prices," Cooper said.
The World Gold Council said investment demand rose 56 percent to 382.1 tonnes for the third quarter of this year as heightened levels of economic and financial uncertainty stirred safe-haven buying. The council said the global demand for gold was expected to be steady around 843 tonnes in the fourth quarter of 2008 on festive demand and buying by investors.
But gold is still 25 percent below a lifetime high of $1,030.80 struck in March, which it has been unable to revisit after selling choked off recent rallies. It hit a two-month high of $931 in October but losses in equities forced investors to cash in to cover losses. Platinum jumped more than 6 percent on bargain hunting, after falling to a three-week low of $759 an ounce in Asian trade as weak demand from the auto industry continued to weigh on prices.
The metal, used mainly in autocatalysts to clean exhaust fumes, was trading at $797.50 an ounce, up from $762.50 an ounce in New York late on Thursday. Honda Motor Co said it would build fewer cars in Japan, Europe and North America to reflect an increasingly bleak outlook for sales as the global economic crisis discourages big-ticket purchases.
"The price falls could lead to some supply side responses, but overall people in the market are mainly concerned about the demand, which is relatively weak," Widmer at BNP Paribas said. New York gold futures rose $10.2 an ounce to $758.7. Silver was at $9.31/9.39 after rising as high as $9.52 an ounce from $8.95 and palladium at $178.50 from $173 an ounce late in New York on Thursday.