Gold rises on Indian demand

Gold edged higher on Thursday, as bargain hunting and physical buying countered volatile oil prices and recent gains in the dollar.Platinum fell more than 4% to its weakest in two weeks, hit by concern over demand for autocatalysts after automakers reported a 10th consecutive month of US sales declines and talk that some automakers sold back inventories.Gold had briefly dipped to near its lowest in nine months a day earlier.In late trading, the metal rose to $US805.80/807.00 an ounce from $US800.05/801.65 an ounce late in New York on Wednesday, when it extended consecutive losses to a fourth day. It is still well below the lifetime high of $US1030.80 struck in March."It looks like we are getting some kind of recovery. One might say around $US790 is going to provide support on the downside. I think we need to break that to see a stronger move lower,'' said Darren Heathcote of Investec Australia in Sydney."At $US790-$US800, physical buying seems to be coming in. We've got immediate resistance coming in around $US809 and probably onwards to target something like $US815,'' he said.Gold fell as low as $US789.05 an ounce on Wednesday, its weakest in two weeks and near its nine-month low around $US773 hit in mid-August. But demand from India, the world's largest consumer, and also the Middle East helped stem the fall.India is stepping up purchases during the festive season, which peak in October with Diwali, the Hindu festival of lights. Many marriages also take place during the festive season, when gold jewellery is an essential part of dowries.Oil prices were little changed near $US109 a barrel on Thursday as traders weighed concerns over slowing demand from major consumer countries against further hurricane threats to the US oil sector.Spot platinum briefly fell to a two-week low of $US1318 an ounce on Thursday. Platinum was trading at $US1343.50/1363.50 an ounce from $US1377.50/1397.50 late in New York on Wednesday - well below the record high of $US2290 an ounce struck in March.The benchmark contract on Tokyo platinum futures, August 2009, fell on speculative sales amid rumours that automakers are selling back their platinum stocks due to poor sales."If demand for cars is not good because of a slowdown in the global economy, automakers may be required to cut their stocks,'' said a dealer in Hong Kong. ``We also see some long liquidation in the market.''US auto sales fell 15.5% to 1.25 million units or to a seasonally adjusted, annualised rate of 13.72 million units in August, marking the 10th straight month of declining sales in the US auto market - the longest such downturn since the 2001 recession.
Autocatalysts, used to clean exhaust fumes, account for more than half of global platinum use.