Gold up on firm oil, eyes economic data

LONDON - Gold gained around 1 percent on Thursday after a jump in oil prices triggered bargain buying and investors eyed a flurry of economic data from both sides of the Atlantic.

By (Reuters)

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Published: Thu 14 Aug 2008, 6:27 PM

Last updated: Sun 5 Apr 2015, 11:53 AM

On Tuesday, gold tumbled to its lowest level this year.

Platinum rose around 1 percent and other metals also tracked gold's gains to defy a rising dollar.

Investors digested the release of Eurozone inflation and second quarter GDP figures and await U.S. July consumer price index and weekly jobless claims data due at 1230 GMT which could set the tone for the greenback.

"The rally in oil has helped the whole metals complex move higher," said metals strategist Tom Kendall at Mitsubishi.

Gold rose to $831.30/832.10 an ounce by 0950 GMT from $825.85/826.85 late in New York on Wednesday, when it jumped more than 1 percent. The metal was off an eight-month low of $801.90 ounce hit on Tuesday.

In theory, expensive oil lifts gold's appeal as a hedge against inflation. Rising oil, which gained 35 cents to $116.35 a barrel on declines in inventories in the United States, the top consumer, also made gold more attractive.

The euro zone economy shrank in line with expectations quarter-on-quarter in the April-June period for the first time since measurements for the single currency area began in 1995, the European Union's statistics office said.

Annual inflation in the euro zone was smaller than earlier estimated at 4.0 percent, rather than 4.1 percent, the European Union's statistics office said.

The euro remained under pressure after the data and the dollar index, which gauges its performance against sixmajor currencies, gained 0.20 percent to 76.400 -- not far off a six-month high reached this week.

"The eurozone data will set the tone for the next few hours and then for sure the U.S. CPI data and jobless claims will be key when the U.S. starts trading," Mitsubishi's Kendall said.

Gold, which struck an all-time high at $1,030.80 in March, has lost much of the gains to profit-taking, oil's decline from record highs and more recently the dollar's rally against a basket of currencies which reduced the metal's safe-haven appeal.

"I think the lower price has attracted buyers into the market. Given the extreme volatility of the gold price in recent days, I think picking the near-term direction is very difficult," said David Moore, an analyst at Commonwealth Bank of Australia.

Silver edged up to $14.88/114.95 an ounce from $14.82/14.88 late in New York.

"Silver is tracking gold, platinum has seen some good interest both from industrial consumers and some of the funds are starting to get long again," Kendall said.

Spot platinum rose to $1,514.50/1,534.50 an ounce from $1,501.50/1,521.50 late in New York. Platinum dropped to an eight-month low at $1,462 earlier this week.

Spot palladium rose to $317.00/325.00 an ounce from $314.00/322.00 an ounce.

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