TOKYO, Japan (Reuters) -- Gold was trading at about $365 an ounce in Asia on Friday, surrendering early gains as the dollar steadied and relief set in that the largest power outage in U.S. history was not caused by sabotage.
Bullion jumped to an 18-day high of $366.75 an ounce in the early morning after blackouts hit New York and other big North American cities, crimping the dollar and suspending electronic ACCESS trading on NYMEX for several hours.
But profit-taking soon replaced speculative buying as it became clear the outages that left millions of Americans in the dark were the result of an accident rather than an attack.
"We are not getting too excited about this one," a metals dealer in Sydney said after officials said a fire at a power plant appeared to be the cause of the blackouts.
Bullion has traditionally been a safe-haven investment in times of economic uncertainty or political strife.
Spot gold was fetching $364.75/365.50 an ounce on Friday afternoon in Asia, down slightly from $365.50/366.20 last quoted in New York.
Gordon Cheung, director of precious metals trading at Mitsui Bussan in Hong Kong, said worries over the economic fallout from the blackouts had triggered shortcovering in the morning, nudging up prices.
But a steadier greenback against the yen took the wind out of the rally as Tokyo stocks reversed course after topping the 10,000 level for the first time in a month.
The dollar, which had shed about a quarter of a yen from the New York close, was almost flat at 118.96/119.01 yen. It was slightly firmer against the euro at $1.1248/51 versus $1.1285.
Traders said gold remained well positioned to test $370 an ounce, with tumbling bond prices freeing up money from the safe-haven crannies of investors' portfolios.
"I think people are shifting money out of the bond market and putting it into the commodities market, and gold is one of the ones to target," Cheung said.
Bullion also drew support from fears of attacks after the capture in Thailand of Hambali, believed to be the mastermind behind the Bali bombings.
Some analysts worry extremists might strike in revenge for Hambali's arrest -- or bring forward planned attacks before he says too much.
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