* Dollar weakens against euro as U.S. equities gain
* Oil recovers from 3-1/2 year low
* Traders look to U.S. auto sales figures to guide platinum
(Recasts, adds comment, updates prices)
By Jan Harvey
LONDON, Dec 2 (Reuters) - Gold climbed 1 percent on Tuesday,
reversing earlier losses, as the dollar weakened against the
euro on firming U.S. equity markets and oil prices recovered
from 3-1/2 year lows.
Spot gold <XAU=> was quoted at $781.70/783.70 an ounce at
1522 GMT, up from $770.60 an ounce late in New York on Monday.
"Oil recovered and the euro-dollar is higher," said Wolfgang
Wrzesniok-Rossbach, head of sales at precious metals group
Heraeus. "Those are the main reasons for the move."
"The outlook from here really depends on the leading
indicators, as well as oil and the dollar," he added.
Gold slipped in earlier trade, extending the previous
session's losses, as the dollar firmed against the euro and oil
prices sank, denting interest in the precious metal as an
inflation hedge.
In addition, rising risk aversion prompted a sell-off of
equities and commodities, while "safer" assets such as the yen
and government bonds are soaring.
Tumbling oil prices also pressured the precious metal, which
is often bought as a hedge against oil-led inflation. However,
prices have steadied in afternoon trade as firm U.S. and
European stock markets helped crude to recover. []
The dollar, the other main external driver of gold, also
turned supportive for the precious metal, tumbling against the
euro and a basket of currencies as a rebound in the equity
markets cheered investors in other assets. []
Investors are awaiting a spate of key data due out later
this week, culminating in U.S. non-farm payrolls numbers on
Friday, and interest rate decisions from central banks including
the ECB, for signs as to the next direction of trade.
"Investors should adopt a cautious strategy today and
monitor credit market developments," said Standard Bank analyst
Manqoba Madinane.
"Increased credit market tension could compromise precious
metal investment flows, which could mean yet further price
declines," he said.
Elsewhere, imports of gold into India -- the world's largest
bullion market -- slipped in November to around 35-40 tonnes
from 54 tonnes a year ago, the Bombay Bullion Association said.
[]
Among other precious metals, silver <XAG=> rose to
$9.62/9.70 an ounce from $9.26.
Platinum recovered after falling sharply on Monday in the
wake of weak Japanese car sales data, having ended that session
down 9 percent.
Traders are looking ahead to U.S. November car sales data
due out later in the session and further news of a possible U.S.
government plan to aid ailing carmakers.
"Sentiment remains nervous with concerns surrounding
negotiations on a bailout for U.S. automakers this week," said
Barclays Capital in a note.
Ford <F.N> said on Tuesday it has submitted its business
plan to Congress, and that it expects its automotive business'
pretax profits to break even or be profitable in 2011.
<ID:nWNA0721>
Carmakers are submitting restructuring plans to Congress
this week before lawmakers reopen debate on a $25 billion
bailout plan for the automotive industry. []
Platinum and palladium are sensitive to a downturn in car
demand, as they are chiefly used as components in catalytic
converters.
Spot platinum <XPT=> rose to $803.50/823.50 an ounce from
$790.50 an ounce late in New York on Friday, while its sister
metal palladium <XPD=> eased to $169.50/177.50 an ounce from
$171.50.
(Reporting by Jan Harvey; editing by Nigel Hunt)
