RTRS: Gold rises as soft dollar lifts precious metals
By Rebekah Curtis and Jan Harvey
LONDON (Reuters) - Spot gold rose back toward its record high at $1,070.40 an ounce on Friday after the dollar's slide to 14-month lows versus the euro early in the session helped the metal beat key technical resistance levels.
Gold was bid at $1,066.20 an ounce at 1313 GMT, versus $1,060.00 late in New York on Thursday, having touched a high of $1,067.30. At its current level it is up more than 5 percent since the start of October.
"Gold is getting close to the interesting levels we saw last week," said Saxo Bank senior manager Ole Hansen. "There has been some technical momentum as we took out some recent highs. The move above yesterday's high has helped sentiment."
"It is also playing catch-up to the dollar weakness we've seen this week, which up until today has not really had much impact on gold prices," he added.
Dollar weakness has boosted investor interest in the metal as a hedge against the U.S. currency, while also making gold cheaper for investors holding other currencies.
Earlier on Friday the dollar -- down more than 7 percent so far this year -- hit its softest level in 14 months against the euro, and analysts say more weakness is expected.
"If the dollar continues to weaken in the same manner, I wouldn't be surprised to see this range of $1,050-1,065 broken and (gold heading) for the $1,070 area," said Afshin Nabavi, head of trading at MKS Finance in Geneva.
Oil prices -- strength in which tends to benefit gold, which is often seen as an inflation hedge -- held above $81 a barrel on Friday, close to the year-high they hit earlier this week.
U.S. gold futures for December delivery were at $1,066.30 an ounce, up $7.70, after falling $5.90 to $1,058.60 on Thursday.
RUSSIA PLANS GOLD SALE
The Russian government wants to sell to the world market 20-50 metric tons of gold from the state repository Gokhran until the end of this year, a source familiar with the matter told Reuters on Friday.
This bucks the trend for central banks to retain gold as a portfolio diversifier. According to the World Gold Council, net sales by central banks in the first half of 2009 were the lowest since 1997, and they turned net buyers in the second quarter.
The market did not react strongly to the news. "The government is in need of cash and this is an obvious way to do that," said Robin Bhar, an analyst at Calyon. "A sale of gold does seem the most sensible thing to do."
News on gold demand suggested conditions were soft. The SPDR Gold Trust, the world's largest gold exchange-traded fund, said its holdings stood at 1,108.094 metric tons on Thursday, unchanged from the previous day.
Meanwhile a senior industry official said Turkey's gold imports will fall by more than two thirds to a historic low of less than 50 metric tons this year on record bullion prices and an increase in sales of scrap.
