Gold firms near 2-week highs on oil, physicals support
Gold rose nearly $7 on the back of firmer oil prices on Friday, hovering near its highest level in more than two weeks, with demand from jewellers ahead of the festive season in Asia also offering additional support.
Gold hits record high on surging oilIndia, the world's largest consumer, is stepping up purchases ahead of the festive season which will peak in October with Diwali, the Hindu festival of lights. Buying before the Muslim fasting month of Ramadan in September also spurred trading.
Gold firmed to $838.15/839.15 an ounce from $831.45/832.65 an ounce late in New York. Gold jumped to $844.00 an ounce on Thursday, its highest level since August 11, before paring some due to a firming U.S. dollar.
Supply of gold bars remained tight in Singapore, which was due to slow arrivals of stocks from refiners in Europe, said Beh Hsia Wah, a dealer at United Overseas Bank.
"The premium is pretty high. The European side says supply may be back to normal by mid-September but I am not too sure about that," she said.
Premiums for gold bars were steady at this year's high of between $1.20 and $1.80 to the spot London prices.
Dealers expected gold to trade in volatile $830 to $845 range amid low volumes ahead of Monday's Labour Day holiday in the United States.
"If anything, gold promises to remain volatile. In the near term, gold-price movements will continue to reflect the ups and downs in the U.S. dollar/euro exchange rate," said Jeffrey Nichols, managing director of American Precious Metals Advisors.
The dollar slipped against a basket of currencies on profit taking and after oil CLc1 rose more than $1 to $117 a barrel on worries about possible supply disruptions caused by Tropical Storm Gustav.
Gold has bounced as much as 9 percent since tumbling to nine-month lows around $773 two weeks ago, on high oil prices and demand from jewellers in Asia and other parts of the world. But gold is trading below a record high of $1,030.80 hit in March.
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