December 26, 2008 / 6:14 AM / in 10 years

Gold mostly steady

TOKYO (Reuters) - Gold was mostly steady on Friday, holding near $845 amid views that the dollar would remain under pressure given the grim outlook of the U.S. economy, but activity was slow due to the holiday season.

Gold coins are displayed at the Ginza Tanaka store in Tokyo September 18, 2008. REUTERS/Yuriko Nakao

New York futures markets were closed on Thursday for Christmas, and will reopen on Friday. All UK financial markets will remain closed on Friday for Boxing Day holiday.

Spot gold inched up to $845.90 an ounce at 3:48 a.m. from $844 late in New York, after moving between $840.00 and $847.75.

Gold has lost about 18 percent of its value from the record high of $1030.80 marked in mid-March.

Koji Suzuki, a senior analyst at SBI Futures, said a weak dollar was benefiting gold, which often trades with an inverse correlation to the dollar due to its role as a hedge against the U.S. currency.

“The lack of liquidity is mostly behind recent market moves as position adjustment takes place, but that is about all that’s happening,” he said.

Trading activity has been light this week due to the Christmas holiday.

The yen dipped against the dollar and the euro on Friday after the release of poor Japanese economic data, but the Japanese currency’s losses were limited in thin holiday trade. <USD/>

The dollar rose to 90.65 yen from around 90.40 yen seen in late Asian trade the previous day.

The euro was barely changed at $1.4020. Against the yen, the European single currency strengthened to 127.10 yen from around 126.65 yen.

Russia’s gold and foreign exchange reserves rose by a record $15.4 billion (10.4 billion pounds) in the latest week thanks to a stronger euro and a rise in commercial banks’ foreign currency deposits.

The series of weak Japanese data released on Friday underscored fears that the world’s second largest economy after the United States could sink back into deflation next year.

Government data showed that annual nationwide core consumer inflation slowed to 1.0 percent in November from 1.9 percent in October.

In a sign of further trouble for an economy already in recession, the ratio of jobs available to those looking for work fell to a nearly five-year low, while industrial production fell a more-than-expected 8.1 percent in November from a month earlier.

February gold futures was mostly unchanged at $848.2 an ounce on the COMEX division of the New York Mercantile Exchange in early Asian trade after settling at $848 in New York on Wednesday.

U.S. crude futures rose above $36 a barrel on Friday after the UAE joined Saudi Arabia in deepening oil supply curbs to comply with OPEC’s biggest-ever output cut last week.

The benchmark December contract on the Tokyo Commodity Exchange rose 12 yen to 2,465 yen per gram.

Platinum rose to $871 from $850 in late New York, while palladium was flat at $174.

Silver inched up to $10.34 from $10.33.

Editing by Kazunori Takada

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