Array

SINGAPORE, Sep 28 (Reuters) Gold traded around $600 for the first time in more than two weeks on Thursday after a recovery in crude oil prices sparked buying from investors and restored the metal's role as a hedge against inflation.

Spot gold rose to $604, its highest since Sept. 11, and was at $601.80/602.80 an ounce by 0142 GMT. That was higher than $599.90/560.90 late in New York on Wednesday.

Gold has tracked movements of oil in recent weeks, falling below the psychological level of $600 for the first time in more than two months on Sept. 11 as oil prices slipped.

Dealers noted speculative buying from Japanese investors, which lent support for gold, though profit taking was also reported at higher levels.

''We saw some light buying from the Japanese but it only happened for a short while. There's also a little bit of selling on the physical side,'' said a dealer in Hong Kong.

''I think it's important for the market to break through $607. If it can't break that level, then the recovery may be over,'' he said.

U.S. crude oil futures held on to gains after rising 3.2 percent to nearly $63 a barrel on Wednesday as traders waited for clearer signs from OPEC on whether it may cut output.

Front-month U.S. crude for November delivery was down 6 cents at $62.90 a barrel on the Globex electronic trading platform.

The physical sector slowed to a trickle as higher prices limited purchases from jewellery makers, but dealers said seasonal demand from main consumers such as India, China and Japan could help bullion stay above $600.

''As we set ourselves to enter the fourth quarter, the market will watch closely the physical demand by jewellers, especially in India, and also the support received by gold as it hovers around the $600 mark,'' Investec Australia in Sydney said in a daily report.

Benchmark gold futures on the Tokyo Commodity Exchange, currently August 2007, rose 42 yen per gram to 2,295 yen ($19.53).

Dealers would be keeping an eye on a raft of U.S. economic data to gauge whether the Federal Reserve's next move will be to cut interest rates. Dealers await a final reading for second-quarter growth on Thursday and a key inflation report on Friday.

The dollar held near late U.S. level at 117.45 yen. The euro edged up to $1.2715, still off its high this week of around $1.2820.

Silver rose to a two-week high of $11.72 an ounce, higher than $11.59/11.66 late in New York.

Platinum rose to $1,146/1,151 an ounce from $1,135/1,143 an ounce. Palladium rose to $319/324 an ounce from $316/320 late in New York.

Precious Metals Prices by 0141 GMT* Metal Last Net change Pct Move Gold 601.80 0.30 +0.05 Platinum 1146.00 6.00 +0.53 Palladium 319.00 0.00 +0.00 Silver 11.68 0.08 +0.69 Change in 2006 Metal Latest bid End prev year Pct Move Gold 601.80 517.20 +16.36 Platinum 1146.00 968.00 +18.39 Palladium 319.00 254.00 +25.59 Silver 11.68 8.81 +32.58 * The closing prices used to calculate the net change may differ from New York's last quoted prices.

REUTERS AD RAI0752