Gold rises on oil, platinum awaits Johnson Matthey

LONDON (Reuters) - Gold rose on Friday, buoyed by firm oil prices, but investors were careful about taking large positions ahead of a raft of U.S. data, which may set the direction for the dollar and precious metals.

Platinum was also firmer amid speculation precious metals refiner Johnson Matthey JMAT.L may release another bullish outlook in its annual report on platinum group metals next week.

Spot gold rose to $884.95/885.95 an ounce from $881.55/882.75 an ounce late in New York on Thursday, when it hit a high of $887.50 on a combination of a falling dollar and rising oil prices.

“I think we’re likely to see more rangebound trading, between the established $850 and $900 in the absence of a new catalyst,” said Suki Cooper, precious metals analyst at Barclays Capital.

“I think the underlying fundamentals for platinum are very strong. We’re likely to see another large deficit in the market this year, given the expectations for reduced supply on the back of the power problems in South Africa.”

Spot platinum firmed to $2,098/2,113 an ounce from from $2,079/2,094 late in New York.

Platinum, used in jewelry and auto catalysts, powered to record high of $,2,290 an ounce on March 4 after a power crisis in main producer South Africa disrupted mining and sparked fear of a supply deficit.

In other markets, oil bounced to $125 a barrel on Friday, within sight of this week’s all-time peak of $126.98, led by the bullish heating oil market as China and Europe scramble for barrels, thinning global supply.

In theory, rising energy costs boost gold’s appeal as a hedge against inflation.

The euro edged up to $1.5471 as investors awaited April housing starts and building permits numbers at 8:30 a.m. EDT (1230 GMT) and the May Reuters/University of Michigan consumer sentiment index at 9:55 a.m. EDT (1355 GMT) for clues on the depth of the U.S. economic slowdown.

The most active June gold futures contract on the COMEX division of the New York Mercantile Exchange added $5.7 to $885.7 an ounce.

“The fund may be a little bit on the buying side, but jewelers are waiting for the downside,” said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

“I think we have to wait for more data to confirm whether the U.S. is in a recession,” said Leung, who also expects gold to trade within the familiar range of $850 to $900.

Gold hedging positions of mining companies fell 18 percent to 22 million ounces in the first quarter of 2008, a report sponsored by Fortis Bank said on Friday, forecasting a full-year drop of 10-12 million ounces.

Palladium XPD= rose at $437.00/442.00 an ounce from $432/440 in late New York. Silver edged up to $16.74/16.80 an ounce from $16.70/16.76 in New York.

Editing by Ben Tan