LONDON -- Gold prices hit a one-week high on Thursday, fortified by investor buying as oil prices rose, the dollar slipped, equities fell and on expectations of strong physical demand over coming months.
Gold rose to $833.00 an ounce, the highest since August 14, and was up at $830.90/831.60 an ounce at 1344 GMT from $810.35/811.75 an ounce late in New York on Wednesday.
A softer dollar and geo-political concerns were the key drivers behind the short-term correction amid an overall bear market, said Dresdner Kleinwort consultant Peter Fertig.
"In the medium term, the dollar is going to strengthen again against the euro and that is going to weigh, not only on crude oil, but also on gold," he said.
Oil rose to over $119 a barrel after Russia responded angrily to a U.S. missile shield agreement with Poland, raising the threat of a supply disruption from the huge energy producer.
"Oil prices at current levels could attract further investment fund flows into precious metals," Standard Bank said in a note, adding that technical signals indicated precious metals were due for a correction.
The firmer dollar in recent months has pulled gold down by around 20 percent from its all-time high of $1,030.80 an ounce it hit in March and a lower price has attracted buying.
Demand for gold in top consumer India fell sharply after prices hit a record but as the country heads into the festival and wedding season, demand will rise.
"There are signs that physical demand is rising sharply in response to low prices," said Eugen Weinberg, commodities analyst at Commerzbank.
"Indian jewellers, for example, are paying far bigger premiums to gold importers in order to meet the rise in demand.
"Indian demand should rise rapidly over the next few months, especially with the country's main religious holidays approaching, which should provide an additional boost."
A weaker U.S. currency makes commodities priced in dollars cheaper for holders of other currencies. Investors often use gold as a hedge against financial turmoil and inflation, often triggered by high oil prices.
European equities fell to three-week lows as oil prices revived inflation concern, financial stocks slid and worries about U.S. mortgage lenders Freddie Mac and Fannie Mae mounted.
The number of U.S. workers filing new claims for jobless benefits fell last week for a second week in a row, the government said, though they continued at levels that showed a weakening labor market.
"Focus is more on the 4-week average and on the continued claims and not on the initial. Stock markets eased after the data -- another supportive factor for gold," Fertig said.
In platinum, palladium and silver, the thinking is also that the recent sell-off has been overdone and that a bounce is due.
But over the longer term, analysts expect platinum's fortunes to be tied to the health of the global car industry, which in recent months has experienced sharply declining sales.
Spot platinum was firmer at $1,401.5/1,421.5 an ounce from $1,368.50/1,388.50 an ounce late on Wednesday.
Palladium at $287.50/295.50 from $281/289 and silver edged up to $13.61/13.67 from $13.15/13.21. Silver hit an intra-day high of $13.71 — the highest since August 15.
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