* Dollar weakens as risk aversion declines
* Oil ticks up $1 a barrel after 4 percent fall
* Traders eye U.S. rescue plan for carmakers
(Recasts, adds detail, changes dateline pvs SINGAPORE)
By Jan Harvey
LONDON, Dec 10 (Reuters) - Gold rose 1 percent to its
highest level in almost a week on Wednesday as a weaker dollar
boosted interest in the precious metal as a currency hedge and
oil prices firmed.
Platinum and palladium also strengthened a touch as the
market awaited fresh news on a potential rescue plan for ailing
U.S. automakers, which could improve the demand outlook for the
metals used in catalytic converters.
Spot gold <XAU=> rose to a session high of $786.20 an ounce,
and was quoted at $784.60/786.60 an ounce at 1016 GMT, up from
$775.50 an ounce late in New York on Tuesday.
U.S. gold for February delivery <GCG9> was up $11.40 an
ounce or 1.47 percent at $785.60 on the COMEX division of the
New York Mercantile Exchange.
"The main factor is the dollar-euro essentially, and that is
clearly a lot weaker today at almost 1.30, compared to 1.26 at
the end of last week," said Calyon metals analyst Robin Bhar.
"With the jobs data out in the States (on Friday) we had a
relatively strong dollar, and now that has gone into reverse,"
he said. "That is the driver (of gold)."
The dollar weakened against the euro on Wednesday as a
tentative U.S. plan to bail out carmakers relieved some risk
aversion, which had benefited the U.S. currency. Traders sold
the dollar and low-yielding yen as market volatility calmed.
[]
Rising crude prices, which can boost interest in commodities
as an asset class and in gold as a hedge against oil-led
inflation, are also supporting gold.
Oil jumped more than $1 to just over $43 a barrel, as 4
percent falls overnight sparked by a downgrade to U.S. energy
demand forecasts and fears of a worsening global recession
prompted some light bargain hunting. []
Traders are looking ahead to next week's meeting of oil
cartel OPEC, where production cuts will be discussed. "There is
speculation that further OPEC oil production cuts could lift
prices," said Fairfax analyst John Meyer.
EQUITIES MIXED
Traders are also eyeing the equity markets, which provided
strong direction to gold on Tuesday. Stocks were higher outside
Europe on hopes governments would implement stimulus measures to
buoy up the lagging world economy. []
European equities were weak, however, as oil stocks and
banks led indices down, though Rio Tinto <RIO.L> jumped on plans
to cut jobs and spending. []
However, demand for physical gold has been lacklustre in key
markets. Gold jewellery sales in Abu Dhabi fell about 20 percent
in November, the emirate's industry group said, and December
sales are likely to be soft as high prices discourage buyers.
[]
Platinum prices were a touch firmer on Wednesday, as traders
eyed a $15 billion U.S. plan to bail out ailing carmakers, whose
woes have knocked the metal lower in recent months.
The U.S. House of Representatives could vote as early as
Wednesday on a plan to restructure carmakers but the project
could still be blocked by the Senate, officials said.
[]
Lawmakers fear that a collapse of any of the Big Three
automakers -- General Motors <GM.N>, Chrysler or Ford <F.N> --
could deepen the U.S. recession.
But while talk of the bailout has helped arrest the metal's
sharp slide -- platinum has shed more than 65 percent of its
value since its March peak -- it may not push it higher.
"While we expect the metal to benefit from further bargain
hunting in the coming sessions, strong resistance is anticipated
around $882-88," said James Moore, an analyst at
TheBullionDesk.com.
Spot platinum <XPT=> was quoted at $815/835 an ounce,
against $803.50, while sister metal palladium <XPD=> was steady
at $174/182 an ounce against $174.
Among other precious metals, spot silver <XAG=> rose to
$9.97/10.05 an ounce from $9.79.
(Reporting by Jan Harvey; editing by Karen Foster)
