* Dollar weakens versus euro, yen
* Oil, industrial metals rise in Asian trade
* Equity markets rally on renewed hopes for U.S. car bailout
(Recasts, adds detail, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Dec 15 (Reuters) - Gold climbed in Europe on Monday
as the dollar weakened against the euro and the yen, boosting
interest in the metal as a currency hedge, and gains in equities
and other commodities fuelled buying appetite.
Spot gold <XAU=> was quoted at $826.90/828.90 an ounce at
0950 GMT, against $819.90 an ounce in New York late on Friday.
Traders are looking ahead to a decision on U.S. interest
rates on Tuesday, after the Federal Open Market Committee's
two-day policy meeting.
A cut in rates is likely to have a significant impact on the
foreign exchange market, and consequently on gold.
"We have the Fed interest rate decision this week... which
should be the last big event of the year," said Afshin Nabavi,
head of trading at MKS Finance in Geneva.
"Everyone is banking on a lower interest rate in the U.S. If
the dollar continues to lose value, of course it will benefit
gold."
Gold was reacting to a move higher in the euro versus the
dollar, with selling of physical gold stocks in the Far East and
technical resistance keeping a lid on gains, he said.
Gold tends to track the euro/dollar exchange rate closely,
as it is often bought as an alternative investment to the U.S.
currency and tends to move in the opposite direction to it.
The dollar slipped against both the yen and the euro,
striking a two-month low against the single currency as traders
weighed comments from European Central Bank officials suggesting
rate cuts may not be imminent. []
Interest rate differentials between the United States and
the euro zone are likely to widen, dealers said. The Federal
Reserve is widely seen cutting rates by at least 50 basis points
on Tuesday.
Equity markets are also rallying, demonstrating a sharper
appetite for risk that is also buoying commodities. Asian stocks
climbed nearly 4 percent on hopes the U.S. car industry will be
bailed out. European shares rose at the open. []
COMMODITIES FIRM
Firm buying interest also trickled into other markets, with
commodities such as oil and industrial metals posting strong
gains in Asian trade. Oil rose more than $1 a barrel on
expectations of a deep OPEC supply cut. []
Among other precious metals, spot silver <XAG=> tracked gold
higher to $10.36/10.44 an ounce, against $10.23 in New York late
on Friday.
The platinum group metals benefited from hopes for a
bail-out of the U.S. automotive industry. Carmakers are major
buyers of PGMs and weakness in the sector has pushed prices
sharply lower in recent months.
"The Senate's rejection of the U.S. automakers' bailout deal
put the PGMs in a weaker mood Friday," The BullionDesk.com
analyst James Moore said.
"The metal has jumped over 3 percent this morning from
Friday's close of $818 amidst renewed hope of a rescue deal for
the beleaguered U.S. automakers."
News that major platinum producer Aquarius Platinum <AQP.L>
will keep its Everest mine in South Africa closed for at least
six months is also likely to support prices. []
Spot platinum <XPT=> climbed to $831.50/851.50 an ounce from
$805.50 an ounce, while palladium <XPD=> surged to a high of
$178, before easing back to $172.50/180.50 an ounce, up from
$168 late on Friday.
(Editing by Sue Thomas)
