Gold eases on firm dollar, investment demand supports

By Chikako Mogi

TOKYO (Reuters) - Gold eased on Friday as the dollar's rise prompted investors to book profits after prices hit record highs above $1,150 earlier in the week, but bullion's appeal as an alternative asset kept support firm.

At current market levels, gold was set for a weekly gain of about 2 percent, for a third straight week of rises.

Bullion rallied successively to record highs this month, underpinned by a number of central bank gold purchases earlier in the month, including India's acquisition of 200 tonnes of the precious metal from the International Monetary Fund.

Falling U.S. equities on growing caution about the U.S. economic outlook may also have helped highlight gold's safe-haven appeal, adding to the bullish sentiment.

"Underlying sentiment remains good in the gold market," said Ben Westmore, commodity economist at National Australia Bank.

"The financial crisis has caused a structural shift in investment behaviour, with market participants now holding a greater preference for less opaque assets where the underlying asset is well defined. This continues to buoy sentiment around gold," he said.

Spot gold fell 0.3 percent to $1,140.50 per ounce as of 0238 GMT compared to New York's notional close of $1,143.50. Spot gold hit a record $1,152.75 an ounce on Wednesday.

U.S. gold futures for December delivery were little changed at $1,141.2 per ounce compared to $1,141.90 an ounce on the NYMEX. Futures hit a record high of $1,153.40 on Wednesday.