* Gold rises 2 percent on dollar weakness before easing
* Oil jumps $3, recoups Friday's 10 percent loss
* Volatility in bullion trading cools after wild Friday
(Updates prices)
By Lewa Pardomuan
SINGAPORE, Oct 13 (Reuters) - Gold gained 2 percent on
Monday, recovering from its biggest one-day drop in nearly 30
years the previous session, as moves by policymakers around the
world to help banks pulled down the dollar.
Prospects for an easing in the month-long financial crisis
could dim investors' interest in gold as a safe haven, but
should also stem the kind of frenzied liquidation that knocked
nearly $65 an ounce off the metal on Friday, the biggest
one-day fall in dollar terms since 1980.
"Because we're seeing a bit of a bounce on currency
markets, that's giving gold a lift," Australia & New Zealand
Bank research head Mark Pervan said.
"But a rebound in the U.S. dollar that would accompany a
recovery in stocks would be bad for gold and we could see
prices hit again," he said.
Spot gold <XAU=> rose $14.95 or 1.76 percent to bid at
$862.35 against a notional close of $847.40 on Friday, when
prices were whipsawed in a nearly unprecedented range of more
than $100.
Gold hit a one-week low of $823.50 on Friday as investors
sought cash to cover margin calls from steep losses in stocks,
having earlier rallied to a two-month high at $931 an ounce.
"Subject to the panic attacks and unstable psychology of
world financial markets, gold will continue its roller-coaster
ride, exhibiting short-term price volatility," said Jeffrey
Nichols, managing director of American Precious Metals
Advisors.
"The withdrawal of central banks from the gold-lending
market is contributing to gold's high volatility. With many
banks and financial institutions at great risk, central bankers
are willing to sacrifice the small return they earn on lending
gold in favour of safekeeping their reserves at home."
Nations from Europe to Australia rushed out more plans on
Sunday to shore up their banks with pledges to back lending,
buy stakes in financial institutions and take other emergency
steps, with markets initially responding positively.
[]
The euro rose 0.7 percent to $1.3506 <EUR=>
Oil <CLc1> gained more than $3 on Monday, recouping some of
the previous session's 10 percent loss, after leaders in the
United States and euro zone took steps to pull the banking
sector away from a deeper collapse. []
"An extended slide in oil and gains in the dollar might
drag gold further down towards the $820 levels or lower," said
analyst Pradeep Unni at Richcomm Global Services.
"However investors might jump in on dips and the current
gold holdings on the gold ETF's are proof," he said.
Holdings in the world's largest gold-backed ETF, the SPDR
Gold Trust <GLD>, rose to 770.64 tonnes as of Oct. 13 from
765.74 tonne as of Oct. 9. <XAUEXT-NYS-TT>.
New York gold futures <GCZ8> added $8.1 an ounce to
$867.1.
Precious metals prices at 0603 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 862.35 14.95 +1.76 3.56
Spot Silver 10.50 0.36 +3.55 -28.91
Spot Platinum 990.00 12.50 +1.28 -34.87
Spot Palladium 186.00 -2.00 -1.06 -49.46
TOCOM Gold 2910.00 27.00 +0.94 -4.90
53336
TOCOM Platinum 3230.00 -27.00 -0.83 -39.50
18543
TOCOM Silver 367.20 -7.30 -1.95 -32.13
1249
TOCOM Palladium 641.00 -19.00 -2.88 -52.55
585
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Additional reporting by Jim Regan in Sydney; Editing by
Michael Urquhart)
