* Gold up almost 3 percent on weak dollar before paring gains
* Higher oil prices, equity markets lift prices
* U.S. GDP data keenly awaited to set direction
(Recasts, adds comment, updates prices, pvs SINGAPORE)
By Julie Crust
LONDON, Oct 30 (Reuters) - Gold rose almost 3 percent to a
one-week high on Thursday as a weaker dollar and rising oil
prices boosted sentiment.
Spot gold <XAU=> was at $770.10/782.60 an ounce at 1111
GMT compared with $754.30 late in New York on Wednesday.
"It's surprising that the increase in gold wasn't as
pronounced as expected," said analyst Eugen Weinberg at
Commerzbank, adding he had expected gold to climb above $800 on
the dollar's weakness.
The metal earlier rose to $776.30 an ounce, the highest
since Oct. 21, and a 2.9 percent gain on Wednesday's close.
"The sentiment for gold is improving day by day," Weinberg
said.
The Fed's move yesterday has put real interest rates further
into negative territory which is positive for gold as it reduces
the opportunity cost of holding the metal, he said.
The U.S. Federal Reserve cut interest rates by half a
percentage point on Wednesday, sending the U.S. dollar tumbling.
Firmer equities also lifted gold and other precious metals,
with silver and palladium rising to their highest in two weeks
and platinum hitting a 1-week high.
Gold was also lifted by higher oil prices <CLc1>, which
typically boosts the metal's appeal as a hedge against
inflation. []
Market partcipants will be looking ahead to U.S. economic
data to set the direction for precious metals. Thursday's
third-quarter U.S. GDP data is expected to show the economy
contracted by 0.5 percent.
SENTIMENT BOOST
Gold, which traded around $800 earlier this month, was still
well below a record high of $1,030.80 hit in March after a rally
to a two-month high of $931 on Oct. 10 was met by heavy selling.
"Precious metal sentiment received a much needed boost
yesterday as the dollar retreated after the Fed's rate cut,"
analyst Manqoba Madinane at Standard Bank said in a research
note.
Gold is still down almost 12 percent since the start of the
month, on track for its biggest monthly decline since 1983, as an
earlier rush for safe-haven assets gave way to a cross-commodity
sell-off by investors scrambling for cash.
"I think all the preconditions are there for gold to take a
very healthy run. The physical demand for gold has actually
exceeded the ability to supply right around the world," said Ian
Smith, managing director of Newcrest Mining Ltd <NCM.AX>,
Australia's largest gold producer.
Silver <XAG=> tracked gold higher and was trading at
$10.02/10.12, an ounce after rising almost 7 percent to a high
of $10.50 against Wednesday's $9.82.
Platinum <XPT=> was trading at $839.00/869.00 an ounce,
after earlier hitting a high of $870.00 an ounce from $793.50.
Lonmin Plc <LMI.L>, the world's third-largest platinum
producer, said the outlook for platinum prices remained
challenging. []
Prices for platinum have fallen about 45 percent so far this
year.
Palladium <XPD=> was at $197.00/207.00 from $194.50.
(Additional reporting by Lewa Pardomuan; Editing by Editing
by Peter Blackburn)
