Gold ends higher as stocks pare gains, oil drops

By Frank Tang and Raissa Kasolowsky

NEW YORK/LONDON (Reuters) - Gold ended higher on Friday as weakness from U.S. equities boosted bullion's alternative investment appeal, despite pressure from lower oil prices and a stronger dollar.

Spot gold was at $927.40/929.40 an ounce by New York's last quote at 2:15 p.m., down from $923.00/924.00 late in New York on Thursday.

In afternoon trade, U.S. stocks pared initial gains as worries about financial stocks lingered, and that prompted investors to switch funds to gold and other alternative investment markets.

Andrew Montano, a director of precious metals at bullion dealer ScotiaMocatta in Toronto said that initial selling was seen after the dollar rose on stronger-than-anticipated U.S. durable goods and new home sales data.

Montano also said that physical gold demand improved somewhat as bullion prices dropped this week.

"We certainly have seen some physical off-take as prices come down, more so than we have seen in recent weeks, but we are in the slow season," Montano said.

Gold has dropped as much as $40 this week due to tumbling oil prices and a higher dollar. Just last week, bullion had moved within striking distance to the $1,000 mark.

U.S. gold futures for August delivery settled up $4.50 at $926.80 an ounce on the COMEX division of New York Mercantile Exchange.