Gold stays high as Middle East violence props oil

By Carole Vaporean

NEW YORK (Reuters) - Gold maintained its strength on Monday, tracking a climb in crude oil prices amid renewed tensions in the Middle East, but it retreated from early highs as oil prices gave up some ground.

Broad weakness in the dollar also supported gold. A slide in the pound sterling to a record low versus the euro helped take the precious metal to a new all-time high when priced in British pounds, according to Reuters data.

Spot gold reached a session high of $889.55 an ounce, its strongest level since October 10, but was off the highs at $877.55/880.55, up from $866.80 late in New York on Friday.

In sterling terms, gold hit an all-time high of 605.07 pounds an ounce, up from 592.40 pounds on Friday. U.S. gold futures for February delivery climbed $4.10 to $875.30.

"The dollar and crude directed the market, with early strength in crude and the weak dollar pushing the market up hard early, along with the events in Gaza Strip," said Stephen Platt, an analyst at Archer Financials in Chicago.

Later in the session, some players used price gains as a profit-taking opportunity, once oil trimmed its gains.

"We backed off those highs in recognition that that situation has not changed. And crude backed off its highs and the dollar rallied up from its lows, which led to some profit taking from that early strength," said Platt.

Israeli aircraft destroyed a bastion of Hamas rule over Gaza on Monday, the third day of an offensive that has killed more than 300 Palestinians in the deadliest violence in the territory.