* Investors watching dollar ahead of U.S. election
* Interest rate cuts make gold more attractive
* Higher oil prices lift gold
(Adds fresh quote, updates prices)
By Julie Crust
LONDON, Nov 4 (Reuters) - Gold prices rose more than 3
percent on Tuesday on the weaker dollar, with investors keeping
a close eye on the currency ahead of the U.S. presidential
election result.
Spot gold <XAU=> was at $740.35/742.25 at 1509 GMT compared
with $722.35 late in New York on Monday. It earlier rose 3.4
percent to a high of $747.05 an ounce.
A win by Democrat Barack Obama, who is leading his
Republican opponent John McCain in most polls, would be
marginally better for the dollar, only because the Democrats
already control Congress, analysts say.
"An Obama-led dollar rally could hurt gold but the effect
will probably only be short lived," said Matthew Turner, an
analyst at VM Group.
The dollar slipped against the euro and yen, but trading was
subdued ahead of the election outcome. []
"The U.S. election might have an impact on the euro/dollar
and so indirectly would have an impact on gold as well," said
Eugen Weinberg, an analyst at Commerzbank.
Expectations of further interest rate cuts this week by
major central banks also boosted gold.
Australia cut interest rates by a greater-than-expected 75
basis points on Tuesday, following rate cuts in the United
States, China and Japan last week, with Britain and the euro
zone expected to follow suit on Thursday with half point
reductions in borrowing costs. []
"The rate cuts...makes gold more attractive as real interest
rates are becoming more negative," said Weinberg.
Gold has bounced more than 7 percent since falling to a
13-month low at $680.80 in late October, when investors cashed in
bullion to pay losses in stock markets. The metal was still below
a two-month high of $931 also hit last month as it struggled to
revisit a record high of $1,030.80 in March.
Higher oil prices were also lifting gold as crude is
considered an inflation hedge along with the yellow metal and
both commodities have been moving in parallel recently.
Oil rose above $66 a barrel, after industry sources said
Saudi Arabia had already made substantial cuts in crude supplies
and helped the market recoup earlier losses. [].
Physical demand for gold was slow as price volatility turned
away jewellers. Gold imports to India, the world's biggest
bullion market, fell 27 percent in October year on year, the
Bombay Bullion Association said. []
Platinum <XPT=> was trading at $811.00/831.00 an ounce
compared with $810 at New York's notional close.
However, platinum has lost more than half its value in the
last quarter on slow auto sales data and the outlook for demand
from carmakers, who consume more than half of the annual
platinum output to make catalysts to clean exhaust fumes.
Automobile sales in Japan, excluding 660cc minivehicles,
fell 13.1 percent in October from a year earlier.
[]
While U.S. auto sales plunged 32 percent in October to lows
unseen in a quarter-century. [].
Lonmin Plc <LMI.L>, the world's No. 3 platinum producer,
advised trade unions of possible lay offs due to a big drop in
demand for the metal from car makers, South Africa's Solidarity
union said. []
However Standard Bank is positive for precious metals in the
longer term.
"Looking past the current turmoil, the stimulus is bullish
for precious metals - but we believe the current turmoil will
likely linger for a few more months," it said in a note.
Palladium <XPD=> was at $203.00/213.00 from $195.50, after
earlier hitting a high of $208.00 on the weaker dollar.
Silver <XAG=> was at $10.09/10.19 from $9.78.
(Reporting by Julie Crust; editing by David Evans)
