Gold prices rallied today, Thursday, to their highest level since February on strong investment demand amid caution ahead of key U.S. non-farm payrolls data on Friday (London GMT).

Bill O’Neill, managing partner of New Jersey-based LOGIC Advisors, said that asset-diversification demand for gold and other precious metals by jittery investors amid shaky equities markets propelled gold’s rally.

Spot gold hit an intraday peak of $992.55, which marked the highest price since Feb. 24. It was at $989.10 an ounce at 12:07 p.m. EDT (1607 GMT), against $976.60 an ounce late in New York on Wednesday.

U.S. December gold futures were up $10.70 at $989.20 an ounce on the COMEX division of the New York Mercantile Exchange.

Fears that U.S. payrolls data may disappoint sparked a flight to quality among investors on Wednesday. The metal broke out of its previous $930-$960 range as a move through technical resistance above $960 sparked a rally.

VTB Capital analyst Andrey Kryuchenkov

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Gold pared gains on Friday as the euro retreated from highs against the dollar in the wake of second-quarter GDP data from the United States.

Spot gold was bid at $935.10 an ounce at 1325 GMT, against $933.30 an ounce late in New York on Thursday. It earlier hit a session high of $939.65. U.S. gold futures for August delivery on the COMEX division of the New York Mercantile Exchange edged up 50 cents to $935.40 an ounce.

The euro gave up ground against the U.S. currency after data released on Friday showed the U.S. economy contracted at a slower-than-expected pace in the second quarter, which analysts said backs views the recession is winding down.

“The U.S. GDP data was fairly good; it is still contracting but at a much slower pace, much better than the first quarter,” said Andrey Kryuchenkov, an analyst at VTB Capital.

“But the personal consumption data wasn’t so good,” he added.

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Gold traded sideways through Hong Kong then shot north at the London open and remained range-bound between $951 and $953 for the rest of the day, finishing at $951.60/oz., up $3.60. For the week, gold is up 1.5%. Platinum sank in Hong Kong, falling to an intraday low of $1167 before adding back all the early losses and a bunch more over the rest of the trading day, closing at $1186/oz., up $11. For the week, platinum is up 1.2%.

Silver developed the gentlest of upward trends early in London and rode that trend through the Globex, ending just off its intraday high at $13.87/oz., up 17 cents. For the week, silver is up 3.4%. (Click here for charts)

Although profit-taking kept gold from staging a big rally this week, the yellow metal should be well supported at current levels because of dollar weakness and inflation fears, analysts said.

“We

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Oil fell below $65 a barrel on Wednesday, curbing a week of gains after data showing an unexpected rise in U.S. crude stocks suggested demand in the world’s top energy consumer was still weak.

The market awaited U.S. Energy Information Administration (EIA) data due at 1430 GMT to see if they would confirm the trend from Tuesday’s American Petroleum Institute (API) figures.

U.S. crude oil for September delivery was down 90 cents at $64.71 a barrel by 1407 GMT, having fallen to a low of $63.76. London Brent crude for September lost 50 cents to $66.37.

The fall followed five days of rises that had pushed U.S. crude oil futures up more than 10 percent in just a week.

“The market has exhausted itself and needs to pause,” VTB Capital analyst Andrey Kryuchenkov said in a research note. “Today, all attention will be on the weekly U.S. fuel inventories.”

U.S. crude oil stockpiles rose unexpectedly

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by Edward Hugh: Barcelonabr /br /br /The Russian ruble strengthened the most in more than three months against the dollar yesterday (gaining 1.7 percent to 32.2247 per dollar at one point) as oil rebounded above $60 a barrel and OAO Sberbank reported better-than-expected earnings. Sberbank shares jumped 5.1 percent after first-quarter net income turned out to be above analyst estimates. But the rise was also helped by the fact that Russia’s central bank spent approximately $2 billion from reserves to try to stop the ruble from falling yesterday, taking central bank reserve spending over the two working days since they lowered interest rates half a percantage point on Friday to around $4 billion, a href="http://www.bloomberg.com/apps/news?pid=newsarchiveamp;sid=aTqgrOY1vdEo"according to reports in the newspaper Kommersant/a.br /br /Russia’s central bank cut its main interest rates for the fourth time in less than three months at the end of last week after the government estimated the ...

The Financial Times has an interesting one on Magna's gamble (as a Trojan horse for Russia) to snap up GM's interests in Opel to give the weakened Oleg Deripaska "ownership" of what would be the largest car manufacturer in the world.  Motivating this aggressive business move is not business sense, nor even elaborate geopolitical machinations to impact the German polity, but rather fears over the collapse of industry and the spread of more "Pikalyovo-like" protest events.  At least according to some people interviewed for this piece.

"If the Opel deal does not go ahead, Russia's car industry is only going to survive with the help of the state because it is just not competitive," says Elena Sakhnova, industry analyst at VTB Capital, the Russian investment bank.

Gaz and Avtovaz are significant employers

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Gold slid more than 1 percent on Monday as a stronger dollar dented interest in the metal as an alternative asset, with investors buying the currency as a safe store of value amid fears over the economic outlook.

Strength in the U.S. unit kept most dollar-priced commodities under pressure as it made them more expensive for holders of other currencies, analysts said.

Spot gold was bid at $921.20 an ounce at 1507 GMT, against $932.30 an ounce late in New York on Friday.

U.S. gold futures for August delivery on the COMEX division of the New York Mercantile Exchange fell $9.70 from Thursday’s close to $921.30 an ounce.

“There is a sell-off with the dollar strength,” said Standard Bank analyst Walter de Wet. “Gold is holding up quite well, compared to the other commodities. At these levels, we might see some physical buying.”

He said while this may lend support to prices, a break of the $920-922

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According to the Moscow Times, Russia's inflation rate in 2009 will be far less than had originally been predicted.  Finance Minister Alexei Kudrin is avoiding over-optimism, saying Russia will meet the target of 13%, although 'maybe it will be even less'.  Russia is considering an extensive bail out of banks, surpassing that undertaken by the US, reports the Financial Times.  Telenor is apparently ready to approve a proposal by Alfa group to merge VimpelCom and Ukraine's Kyivstar.  A consortium of VTB Capital, Fraport and Copelouzos Group has announced it has won a tender to develop and reconstruct St Petersburg's Pulkovo Airport, beating two other consortiums (one of which included Deripaska's Basic Element).  During Medvedev's visit to Namibia a memorandum of understanding was signed allowing Russian fishing ships to operate in Namibian waters.  The Moscow Times reports ...

Gold pushed steadily higher from the far East through to the New York open on Tuesday, but the $939 peak was the high for the day as it sold off in fits and starts to just after noon, before regaining some lost ground over the final hours to close at $934.80/oz., up $6.80. Overnight, gold has fallen off. Platinum moved slowly higher, to $1230 just before noon, but got taken down from there to end at $1216/oz., up $11. Overnight, platinum is sharply lower.

Silver had a series of gentle undulations between $14.10 and $14.40 and, though it closed nearer the lower end, was still in positive territory at $14.18/oz., up 16 cents. Overnight, silver is trending lower. (Click here for charts)

With the dollar off a bit and oil slightly lower, one might have expected the precious metals to turn in a blah day, and that’s about what

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Gold dipped below $970 in late Hong Kong trading on Tuesday, but that was the low for the day, as prices rose sharply to the New York open, then settled into a trading range between $980 and $985, before finishing at $981.10/oz., up $6.50. Overnight, gold is unchanged.

Platinum bottomed below $1210 late in far East trading, moved slowly higher to mid-morning, then really took off and hung onto its gains, ending at its intraday high of $1239, up $30. Overnight, platinum is trending higher.

Silver also hit its nadir in Hong Kong, at $15.45, then was off like a shot, soaring to $16 in the late morning, sold off until just past the noon hour, but then caught a second wind that carried it back over most of the lost ground as it closed at $15.96, up 37 cents. Overnight, silver has edged higher. (Click here for charts)

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