Gold steadies as oil recovers, platinum choppy

By Lewa Pardomuan

LONDON (Reuters) - Gold steadied on Thursday as oil prices bounced back towards $125 a barrel, encouraging some speculators to put their money into the precious metal as a hedge against inflation.

Platinum struggled to hold above $2,000 an ounce amid signs electricity supply in main producer South Africa was returning to normal after power cuts in January forced mines to shut down operations, sparking supply fears and sending prices to record.

Spot gold was at $866.00/867.00 an ounce, steady from $865.05/866.25 an ounce in late New York on Wednesday when it touched a one-week low of $859.30 on a firmer U.S. dollar.

A combination of profit taking and a recovery in the dollar against other currencies have put pressure on gold since it spiked to a record high of $1,030.80 an ounce on March 17.

But record high oil prices were likely to offer support, and dealers also expected jewelry makers to take advantage of lower prices to stock up again.

"This is a perfect opportunity for them to be restocking because the gold price could very easily get back above the $900 territory, and gold can do that in a very short space of time," said Nick Moore, metals analyst at ABN AMRO.

"I think the high gold price clearly had very significant impact on jewelry off-take. I think the direction, looking ahead, will be driven partly by what's happening with oil."

Oil rose towards $125 a barrel as the dollar weakened, having fallen earlier in the session on rising U.S. fuel inventories.