Gold bounces on oil-led buying

By Lewa Pardomuan

SINGAPORE (Reuters) - Gold bounced on Monday on speculative buying driven by higher oil ahead of Hurricane Gustav but a firm dollar capped gains, while platinum fell more than 3 percent on concerns about falling demand for autocatalysts.

Poor car sales and a slowing U.S. economy weighed on platinum, which has tumbled nearly 40 percent since hitting a lifetime high of $2,290 an ounce, in March. Sister metal palladium also dropped, while silver tracked gold higher.

Gold rose to $833.70/834.70 an ounce from $830.35/832.3 an ounce late in New York on Friday, when it slipped more than $1 on profit taking ahead of Monday's U.S. Labor Day holiday.

"There's some resistance on the top side. I think it's mostly related to strong U.S. dollar. The market is still consolidating right now around $800 to $850," said Dick Poon, manager of precious metals at Heraeus Ltd in Hong Kong.

Spot platinum fell as low as $1,418.50 an ounce, down from $1,474.50/1,494.50 in New York, with technical selling and weakness in Japanese futures also dragging down the price from an intraday high of $1,477.

"I think the demand is slow right now. There are still worries about the global economy, that's why they don't want to buy too much for the being," said Poon.

The bulk of the world's platinum is used by automakers in autocatalyst systems that scrub exhaust fumes of dangerous and environmentally damaging chemicals.

A sudden slowdown in car sales in China and India is threatening to shrink the global auto market this year, spelling tougher times for an industry leaning on the two most populous countries to pick up the slack in the West.

Looking ahead, movements in oil and currencies will set the direction of precious metals, with investors also waiting for the release of U.S. economic indicators, including Friday's non-farm payrolls.

Oil rose more than $1 after energy firms in the U.S. Gulf shut down nearly all offshore oil output and a host of flood-prone coastal refineries ahead of Hurricane Gustav, the biggest threat since 2005's devastating Katrina.

The dollar approached an eight-month high against a trade-weighted basket of currencies.

"I guess people will closely watch oil prices because Gustav may be worse than Katrina. They say Gustav is Katrina's boyfriend," said a physical dealer in Singapore.

Purchases from jewelers in Indonesia spurred trading in the physical sector ahead of the Muslim Eid al Fitr holidays in October, while a political crisis in Thailand had yet to trigger safe-haven buying.

A small bomb exploded in a central Bangkok police booth on Monday as a stand-off between the Thai Prime Minister and protesters occupying his office entered its seventh day with no sign of either side backing down.

Thailand is Asia's fourth-largest gold investor. Premiums for gold bars were steady at $1.50 to $1.80 an ounce to the spot London prices.

The benchmark platinum contract on the Tokyo Commodity Exchange, August 2009, fell 132 yen per gram to 4,943 yen. New York gold futures added $4.0 an ounce to $839.20.

Spot palladium eased to $300.50/308.50 an ounce from $303.00/341.00 an ounce. Silver firmed to $13.74/13.79 an ounce from $13.58/13.68 an ounce late in New York.

Precious metals prices at 3:50 a.m. EDT

Metal Last Change Pct chg YTD pct chg Turnover

Spot Gold 833.30 3.50 +0.42 0.07

Spot Silver 13.72 0.14 +1.03 -7.11

Spot Platinum 1437.00 -39.50 -2.68 -5.46

Spot Palladium 301.00 -1.50 -0.50 -18.21

TOCOM Gold 2910.00 -34.00 -1.15 -4.90 32728

TOCOM Platinum 4939.00 -136.00 -2.68 -7.49 24919

TOCOM Silver 479.10 -6.80 -1.40 -11.44 783

TOCOM Palladium 1070.00 15.00 +1.42 -20.80 1118

Euro/Dollar 1.4650

Dollar/Yen 107.87

TOCOM prices in yen per gram, except TOCOM silver which is priced in yen per 10 grams. Spot prices in $ per ounce.

(Editing by Clarence Fernandez)