Gold edges down as dollar weighs

Gold edged down on Friday as resilience in the dollar hampered investor buying, although crude oil prices clawed back toward $125 a barrel.

Analysts said many investors are now focused on the oil market, resulting in a halt or even an outflow of money into non-oil commodities, in particular precious metals.

Underlining a fall in investor appetite in the gold market, gold holdings in the world’s largest exchange-traded fund (ETF) for bullion, StreetTRACKS Gold Shares, fell slightly after hitting a peak last week.

Also, gold has been stuck in an $850-$890 band this month.

"Trade is centred in the crude oil market as investors are prepared for inflation. They also buy stocks, but not the other commodities," said Yuki Sonoda, an adviser at Japanese brokerage Daiichi Commodities Co.

"The crude oil market has been consolidating after hitting a record high. But there are signs it is gaining momentum, showing a sharp contrast to the gold market," he said.

Spot gold was at $880.30/881.20 an ounce as of 0404 GMT, compared with $881.55/882.75 in late New York trade on Thursday, when it hit a high of $887.50 on a weakening dollar.

Gold held in StreetTRACKS Gold Shares fell to 589.46 tonnes this week after topping 590 tonnes earlier this month in a brief recovery from a seven-month trough of 580.46 tonnes.

Oil prices rebounded to near $125 a barrel on Friday, led by the bullish heating oil market as China and Europe scramble for barrels, thinning global supply.

US crude for June delivery was up 81 cents a barrel at $124.93, off a record near $127 marked on Tuesday.

The foreign exchange market provided little help, with the dollar stuck in a narrow range against the euro.

The euro rose to $1.5477, up 0.2 percent from late New York trade on Thursday and off last week’s peak above $1.55.

Against the yen, the dollar was little changed at 104.65 yen, having slipped from around 104.89 yen after data showed Japan’s Economy grew 0.8 percent in January-March from the previous quarter, above market expectations for a 0.6 percent increase, for an annualised increase of 3.3 percent.

The most active June gold futures contract on the COMEX division of the New York Mercantile Exchange rose $1.3 to $881.3 an ounce.

Yen-based gold futures for distant April delivery on the Tokyo Commodity Exchange rose 45 yen a gram to 2,989 yen.

Spot platinum stood at $2,062/2,080 an ounce, down from $2,079/2,094 in New York on Thursday, when it hit a one-week trough of $1,988.50.

Platinum has been supported at around $2,000 amid speculation that platinum specialist Johnson Matthey may provide a bullish outlook in an annual report on platinum group metals due next week.

Daiichi Commodities’ Sonoda said scattered buying by Japanese auto makers has propped up the white metal this month.

Palladium was at $432.50/440.50 an ounce, little changed from $432/440 in late New York. Silver was at $16.74/16.80 an ounce, against $16.70/16.76 in New York.