Gold hits 3-mth high on firm oil, platinum up 2 pct

Jan Harvey
Reuters
Friday, July 11, 2008

Gold climbed to a three-month high in Europe on Friday, supported by firmer oil, while platinum extended gains made in Asia to rise 2 percent.

Spot gold was at $949.00/950.00 an ounce at 5:23 a.m. EDT, up from $944.10/945.30 late in New York on Thursday. Earlier it touched a session high of $949.10, its strongest since April 17.

"The market still seems very well bid, and we may try higher later today," said Rory McVeigh, a senior trader at Commerzbank. "(US data) will be the focus of today's movement."

Gold rallied nearly 2 percent on Thursday, as rising oil prices pushed the metal through technical stops.

The precious metal tends to move in line with crude, as it is often bought as a hedge against oil-led inflation. Strength in oil prices also boosts the appeal of commodities as an asset class.

Oil is firmer again this morning, extending yesterday's 4 percent gains, amid rising geoplotical worries in Iran and Nigeria, and on fears over supply disruptions in Brazil.

The other main external driver of gold prices, the dollar, was steady against the euro on Friday as equity markets ticked up. Gold moves in the opposite direction to the dollar, as it is often bought as a currency hedge.

A weaker greenback also makes dollar-priced commodities such as gold cheaper for holders of other currencies.

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