US gold futures erased gains to trade slightly higher early on Thursday, holding just above the $800 an ounce level, as a stronger dollar against the euro and falling oil prices offset safe-haven buying due to renewed credit fears. Gold for February delivery inched up 70 cents to $809.50 an ounce at 11:06 am EST (1606 GMT) on the COMEX division of the New York Mercantile Exchange.
The range spanned $822.10 to $802.80, which marked the cheapest price since December 11. Gold pressured after euro erased gains to trade lower versus the dollar on expectations of more interest rate cuts in the eurozone. Currency-related weakness and deflation argument weighed down gold futures, said James Steel, HSBC chef commodity analyst.
Gold supported by safe-haven buying as mounting credit worries sent shares of Bank of America and Citigroup to multiyear lows. However, safe-haven buying might not be enough to support gold in the face of a falling euro and crude oil weakness, added Steel. Partially supported by news that South African gold output fell 8.7 percent in volume terms in November, compared with the same month in the previous year, according to official data.
Gold consultancy GFMS Chairman Philip Klapwijk said he expected bullion to trade between $750 and $1,080 in 2009. Gold futures fell less than crude oil contracts on Thursday. Gold/oil ratio rose to 22.8 compared with 21.80 in the previous session. COMEX estimated 9 am volume at 44,006 lots, options turnover at 1,490 lots. Spot gold was at $806.60 an ounce, down 0.5 percent, compared with the last trade on Tuesday.
March silver fell 2.0 cents to $10.455 an ounce on broad-based commodity weakness. Range $10.340 to $10.675. COMEX estimated 9 am volume at 5,515 lots. Spot silver quoted at $10.42, down 1.1 percent from its previous session close. NYMEX April platinum slipped $8.30 to $927.50 an ounce on lacklustre autocatalyst demand from US automakers.
Spot platinum quoted at $921.00, down 1.3 percent compared with its last finish. NYMEX March palladium slid $5.60, or 3.1 percent, to $176.35 an ounce, tracking platinum's decline. Spot palladium quoted at $175.50, 2.8 percent lower than its previous close on Wednesday.