Array

TOKYO, July 13 (Reuters) Gold drifted down on Friday but hovered near its highest in five weeks reached the previous day as the weakness in the dollar and healthy technical trends induced fresh fund inflows.

Tokyo Commodity Exchange platinum futures hit another record high on a labour dispute in South Africa, but they ran out of steam by the mid-session close as Japanese investors lightened their postions ahead of the three-day weekend in Japan.

''Funds are shifting into the market where there is a clear trend. It was important that gold has broken through the 100-day moving average clearly,'' said Shuji Sugata, manager at Mitsubishi Corp. Futures and Securities Ltd ''The dollar's fall against the euro is another positive factor.

The trend for gold has turned bullish.'' As of 0320 GMT, spot gold was trading at $666.40/667.20 an ounce from $667.00/667.80 an ounce late in New York on Thursday, when it rallied to as high as $669.05 an ounce as the U.S. dollar tumbled to a record low against the euro.

Gold was also well-above the 100-day moving average of $663.58 as of Friday.

The dollar continued to slump against the euro as troubles in the U.S. mortgage and credit markets continued to dampen the currency's appeal.

The euro eased to $1.3780 on Friday but hovered within reach of a record-high $1.3799 hit the previous day on electronic trading platform EBS.

The market's focus is on U.S. retail sales data for June at 1230 GMT, and traders said a weak reading was likely to further damage sentiment for the dollar.

A weaker dollar makes gold cheaper for holders of other currencies and often lifts bullion demand.

Tokyo traders said gold could be increasing its safe-haven appeal as uncertainties were growing in U.S. credit markets.

Traders said bullion's rise prompted investors to increase holdings in StreetTRACKS Gold Shares , the No. 1 gold exchange-traded fund (ETF).

Most recent data showed bullion held by StreetTRACKS increased to 481.15 tonnes, sharply higher than 464.22 tonnes reported last Thursday.

In Japan, most active June 2008 gold futures on the Tokyo Commodity Exchange finished morning trade at 2,653 yen a gram, up 19 yen or 0.7 percent from Thursday.

It reached a session peak of 2,656 yen -- the highest for a benchmark contract since June 5.

Other precious metals also rose strongly in line with gold.

June TOCOM platinum hit a fresh record high of 5,127 yen per gram before dipping to 5,110 yen, still up 13 yen from Thursday's close.

''Platinum is strong fundamentally with concerns over of strikes in place,'' Sugata said.

South African trade unions declared a dispute against the world's biggest platinum producer, Anglo Platinum Ltd. , on Wednesday after it refused to increase its wage offer.

Spot platinum fell to $1,308/1,313 an ounce from $1,314.80/1,321.80 late in New York on Thursday, when it rallied to its highest in nearly two months at $1,315.90.

Silver edged down to $13.07/13.11 an ounce from $13.08/13.13 an ounce.

Palladium rose to $368/373 an ounce from $367.75/371.75 an ounce.

REUTERS SW PM1028