* Euro heads for 4.5 percent weekly gain vs the dollar
* U.S. stock markets briefly turn positive
(Recasts, updates prices, adds comment)
By Jan Harvey
LONDON, Dec 12 (Reuters) - Gold prices swung higher on
Friday as the euro touched a seven-week high against the dollar,
boosting the precious metal's appeal as a hedge against weakness
in the U.S. currency.
But platinum and palladium fell in line with other
commodities such as oil and industrial metals, as the collapse
of a mooted deal to rescue ailing U.S. carmakers knocked
investors' confidence.
Spot gold <XAU=> was quoted at $825.40/827.40 an ounce at
1530 GMT, up from $818.35 an ounce on Thursday and well off an
earlier low of $807.00 an ounce.
U.S. gold futures for February delivery <GCG9> were down 90
cents at $825.70 an ounce.
"We had some deleveraging this morning as everything else
was sold off," said Calyon analyst Robin Bhar. "The dollar has
stayed weak and the euro's strengthened, and gold has gone up."
Traders are also loathe to hold short positions over the
weekend, in anticipation of a fresh rounds of announcements on
the economic situation, he said.
A softer dollar tends to benefit gold, which is often bought
as an alternative investment to the U.S. currency.
The dollar has shed more than 4.5 percent against the euro
this week, putting it on track for its biggest percentage loss
against the single currency since it was launched in 1999.
Gold slipped in early trade along with other commodities
such as oil and base metals after the failure of a mooted $14
billion plan to aid U.S. carmakers.
The U.S. House of Representatives had agreed to the bailout,
but the plan could not get through the Senate.
The bailout's failure, for this year at least, raised fears
of an industry collapse that could threaten countless jobs, with
uncertainty filtering through to the financial markets, sending
investors fleeing from risky assets. []
The White House moved to calm nerves on Friday afternoon,
saying it was considering tapping a $700 billion financial
industry bailout fund to prevent the collapse of automakers.
[]
Nonetheless, oil prices have fallen by more than 7 percent,
and industrial metals tumbled, with copper and nickel prices
sliding by more than 5 percent each. []
EQUITIES TURN
Equity markets briefly turned positive in the United States
after a weak session in Europe and Asia, after data showed a
surprise jump in consumer sentiment. []
Commerzbank trader Rory McVeigh said platinum and palladium
had been among the assets most affected by the rejection of the
U.S. rescue plan for carmakers.
Platinum fell 4 percent and palladium more than 5 percent as
traders worried about the outlook for demand from carmakers, who
consume about half of global supply of the two metals each year.
Troubles in the automotive sector have already knocked
platinum and palladium down some 65 percent and 70 percent
respectively from this year's highs reached in March.
Spot platinum <XPT=> fell to a session low of $790.50 an
ounce, and was later at $803/823 an ounce against $826.
Palladium <XPD=> was at $171/174 an ounce against $177.
Spot silver <XAG=> was at $10.22/10.30 an ounce, down from
$10.30.
(Editing by William Hardy)
