* Dollar at 8-week low vs euro, 2009 low vs currency basket
* Equities, oil climb as risk appetite sharpens
* Palladium hits 7-week high; platinum near 6-week peak
(Updates throughout, changes dateline-pvs TOKYO)
By Jan Harvey
LONDON, July 28 (Reuters) - Gold firmed in Europe on Tuesday
as the dollar weakened, with fresh gains in equity markets
boosting appetite for assets seen as riskier, while platinum and
palladium held near multi-week highs.
Spot gold <XAU=> was bid at $954.00 an ounce at 0904 GMT,
against $952.65 an ounce late in New York on Monday. U.S. gold
futures for August delivery <GCQ9> on the COMEX division of the
New York Mercantile Exchange rose $1.40 to $954.90 an ounce.
Spot prices remained within a narrow $945-960 range for a
sixth consecutive session, as investors stayed on the sidelines
during the seasonally weak summer period.
Standard Bank analyst Walter de Wet said the longer gold
remained confined to its current range, the greater the
possibility of it eventually breaking lower.
"At these levels the bias is the downside for gold," he
said. "It is going to be tough for gold to move higher."
"If the dollar continues to soften it is going to support
the gold price, but even then, if we close in on $1,000 an
ounce...we will see a reaction from the physical side and more
scrap coming onto the market," he said.
The dollar slid to an eight-week low against the euro <EUR=>
and its weakest this year versus a basket of currencies <.DXY>
as rising risk appetite demonstrated by a fresh rise in equity
markets boosted buying of currencies seen as higher risk. []
Gold, like other dollar-priced commodities, becomes cheaper
for holders of other currencies as the U.S. unit weakens. Dollar
weakness can also prompt buying of hard assets such as bullion.
European shares rose in early trade. Rising stock markets
are underpinning hopes the worst of the financial downturn may
be over, boosting risk appetite. []
This has helped oil prices post their most sustained rally
since June 2008. Rising crude prices can lift gold, which is
often seen as a hedge against oil-led inflation. []
RANGEBOUND
Holdings of the world's largest gold exchange-traded fund,
the SPDR Gold Trust <GLD>, were unchanged for a third day on
Monday, while those of ETF Securities three gold-backed ETFs
declined nearly 25,000 ounces or 0.3 percent. []
The smaller platinum group metals, palladium and rhodium,
performed strongly on Tuesday after their sister metal platinum
hit a six-week high on Monday as the weaker dollar and strength
in gold prices underpinned gains.
Palladium <XPD=> climbed to a near seven-week high of
$261.50 an ounce on Tuesday, tracking platinum higher, while
rhodium <RHOD-LON> rose another $75 to $1,675 an ounce.
All three metals, which are primarily used in the auto
industry as components in catalytic converters, have suffered
from a fall in car demand over the last year, but are showing
tentative signs of recovery.
"Platinum prices are still rising alongside other precious
metals, while outpacing gold on the back of its industrial
appeal," said VTB Capital analyst Andrey Kryuchenkov in a note.
"Key resistance is now at $1,220, and we expect equities to
dictate direction for the rest of the week," he added.
Platinum <XPT=> was at $1,207 an ounce against $1,215, while
palladium was at $261 against $259. Elsewhere silver <XAG=> was
at $14.02 an ounce versus $14.01, having earlier matched the
previous session's four-week high of $14.08.
(Reporting by Jan Harvey; Editing by Sue Thomas)
