NEW YORK/LONDON (Reuters) - Gold ended slightly lower Friday on preweekend profit taking despite a recovery in crude oil prices and a lower dollar against the euro following tough anti-inflation comments from the European Central Bank.
Traders were also watching the crude market ahead of a weekend meeting of oil producers and consumers in Saudi Arabia, with any new strength in oil prices likely to push gold higher.
Spot gold was at $901.35/902.75 by New York’s last quote at 2:30 p.m. EDT, compared with $902.95/904.35 an ounce late in New York on Thursday when it jumped as high as $907.90 an ounce, its strongest level in more than a week.
The metal eased earlier on Friday after Thursday’s price rally failed to take gold through its previous high of $908.70, hit on June 9.
“From a technical point of view, we have failed to go above the high we saw last week,” said Wolfgang Wrzesniok-Rossbach, head of sales at precious metals trading group Heraeus.
“That would have been a bullish signal to the market that would have attracted some speculators, as there is not a lot of resistance from there to $935 an ounce,” he added.
The U.S. August contract on COMEX division of New York Mercantile Exchange settled down 50 cents at $903.70 an ounce.
Jonathan Jossen, independent COMEX floor trader in New York, said that a big fund player on Thursday had bought a large number of long put options together with long futures, which was seen as a bullish trading strategy.
“Maybe not today, but I think that we should be trading substantially higher at the $925 to $930 level,” Jossen said.
Crude oil ended up $2.69 at $134.62 a barrel on a view now gaining ground that a fuel price increase by China may actually boost rather than curb demand for fuel in the world’s second-largest oil consumer.
Higher oil prices weighed on the dollar, which also came under pressure on talk of higher euro zone interest rates by ECB Executive Board member Lorenzo Bini Smaghi in a column for the Financial Times.
Dollar sentiment has also been hit by a raft of poor data, which has raised concerns over the health of the U.S. economy.
“(Gold) prices are holding firm partly in response to speculation that the U.S. Fed could delay increasing interest rates,” said Fairfax analyst Marc Elliott.
The precious metal tends to move in the opposite direction of the U.S. currency as it is often bought as a hedge against dollar weakness.
Meanwhile, the Swiss National Bank (SNB) said on Friday its gold holdings fell by 368,000 ounces month-on-month to 35.02 million ounces at the end of May.
Among other precious metals, spot platinum was last at $2,050/2,060 an ounce from $2,036.50/2,056.50 on Thursday.
Palladium was at $470/475 an ounce from $469.00/477.00 and silver was at $17.37/17.43 an ounce from $17.39/17.44 late in New York on Thursday.
Additional reporting by Pratima Desai in London; Editing by Christian Wiessner