Gold slips on dollar rise, but oil supports

LONDON - Gold drifted lower on Tuesday, erasing overnight gains, as the dollar bounced off a one-month low, but traders kept an eye on rising oil prices following supply disruptions in Nigeria.

By (Reuters)

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Published: Tue 27 May 2008, 5:17 PM

Last updated: Sun 5 Apr 2015, 1:44 PM

Other precious metals followed suit, with spot silver edging down and spot platinum paring early gains.

Spot gold fell to $922.30/923.30 an ounce at 1025 GMT, from an earlier intra-day peak of $930.50, and down from $925.20/926.60 in New York late on Friday.

Markets in Britain and the United States were closed for public holidays on Monday.

"It's (gold) not showing any particular propensity to move either way at the moment. There's some key economic data out this week which will have an influence on its direction," said Daniel Hynes, metals strategist at Merrill Lynch.

"Until we get a better feel of the short term outlook, it's going to be rangebound. It's really struggled to push above the $925 mark and when it has, it's been sold off pretty well."

The euro slipped from a one-month high against the dollar, relinquishing earlier gains after weak German consumer sentiment figures stoked concerns that cracks in the euro zone economy are starting to show.

Investors also expected U.S. economic data and speeches this week by Federal Reserve officials, including Chairman Ben Bernanke on Thursday, to provide a clearer picture of the U.S. economy. New U.S. home sales for April and consumer confidence for May are due at 1400 GMT.

But a rise in oil prices above $133 on production problems in the North Sea over the weekend and in Nigeria on Monday where rebels blew up a pipeline, kept inflation fears high and put a floor under falling bullion prices.

"Volatility looks set to remain high in the coming days, with the dollar and oil to continue providing much of the metals intra-day direction," James Moore, analyst at said in a report.

He added that inflation pressures and ongoing credit market issues provide background support.

Gold futures for June delivery on the COMEX division of the New York Mercantile Exchange fell $3.00 to $922.80 an ounce in electronic trading.

"Although the dollar's weakness will be supporting the price of gold, the seasonal dip in physical demand prior to the third quarter makes strong gold gains unlikely," Commerzbank said.

"Nevertheless, gold and other precious metals, as liquid tangible assets traditionally seen as a good hedge against inflation, are still an attractive option."

In other precious metals, spot platinum rose as high as $2,189 an ounce before falling to $2,167.50/2,187.50, versus $2,156.50/2,176.50 late in New York on Friday.

Silver fell to $18.11/18.16 an ounce from $18.18/18.26, while palladium was flat at $446/$454.

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