Gold edges up as dollar eases, oil climbs

Platinum steadied after a rise in prices fuelled by strike action in South Africa on Wednesday ended a three-session slide that drove prices down some $180 an ounce to six-month lows.

Gold XAU edged up to $882.20/883.20 an ounce at 0939 GMT from $878.70/879.90 late in New York. Earlier this week the precious metal dropped to a seven-week low as part of a broader commodities sell-off fuelled by a firmer dollar.

"We are seeing a slight strengthening in the euro versus the U.S. dollar. That will keep the gold market above support lines," said Saxo Bank analyst Philip Carlsson.

"We are also seeing a small turn in the crude market, which is adding to this development."

Oil climbed more than $1 a barrel on Thursday as supply concerns fuelled buying. Firmer crude prices usually benefit gold, which can be bought to hedge against oil-led inflation.

Carlsson warned, however, that both the crude and gold markets remain vulnerable to further losses, and that any break of support could result in a swift price move.

The dollar weakened broadly on Thursday, as oil prices bounced back from three-month lows, prompting traders to take profits.

Gold typically moves in the opposite direction to the dollar, as it is often used as a hedge against weakness in the U.S. currency.

The euro firmed a touch against the U.S. currency ahead of the ECB's rate-setting decision later in the session, and ECB president Jean-Claude Trichet's accompanying press conference.

While the bank is widely expected to leave rates on hold at 4.25 percent, the markets will be focused on Trichet's comments for clues as to future ECB policy.

"The ECB press conference could move markets and might have an impact on gold via the (foreign exchange) market," said Dresdner Kleinwort in a note.

"The ECB is still unlikely to ease its inflation rhetoric, but might recognise the weaker than expected data flow," it added.

Platinum steadies

Platinum steadied after Wednesday's price rise, which came on the back of a South African strike and renewed confidence in the sector sparked by Xstrata's $10 billion bid for Lonmin.

Traders remain worried about the outlook for the car industry, source of 50 percent of platinum demand, however.

"Reduced production of large U.S. SUVs could... reduce the need for platinum where each SUV contains some 8-10 grams of platinum in its catalysts," noted Fairfax analyst John Meyer.

The world's biggest carmaker, Toyota, reported a 28 percent drop in quarterly net profit on Thursday, which it blamed in part on slumping U.S. sales.

Spot platinum was steady at $1,594.50/1,614.50, unchanged from its level late in New York on Wednesday.

Spot palladium edged up to $352.00/356.00 an ounce from $349.50/357.50 late in New York. Silver climbed to $16.60/16.65 an ounce from $16.51/16.57.