* Euro firms versus dollar after 2-1/2 year low
* Stock markets recover in U.S., Europe
(Releads, updates prices, adds comment)
By Jan Harvey
LONDON, Oct 28 (Reuters) - Gold firmed on Tuesday,
benefiting from a softer dollar and a recovery in equities, with
rising oil prices also boosting interest in the precious metal.
Spot gold <XAU=> rose to a session high of $755.00, before
slipping back to $734.60/737.10 at 1424 GMT. Late in New York on
Monday it was quoted at $729.60 an ounce.
Current moves in the gold market are pretty much U.S.
-dollar driven, said Commerzbank senior trader Michael
Kempinski, adding that gold's fall during the market turmoil of
recent weeks has tempered the metal's safe haven appeal.
"We see good physical demand below or around $700 an ounce,"
he said.
The dollar slipped against the euro after earlier hitting a
2-1/2 year high versus the single currency, as risk aversion
eased. []
Traders are eyeing the two-day rate-setting meeting of the
U.S. Federal Open Market Committee, which is expected to deliver
a decision on Wednesday.
The Fed is expected to cut lending rates by half a
percentage point to 1 percent, the lowest since June 2004, in a
bid to calm turmoil in the financial markets. []
"The U.S. dollar has broadly appreciated on the back of
deleveraging in emerging markets and lower rate expectations
elsewhere, with 50 basis points fully priced in for tomorrow's
Fed rate decision," said analysts at Barclays Capital.
"There is some risk of a 75 basis point move as well, which
could increase if the data are very weak," they added.
Wall Street stocks opened sharply higher, while European
shares rose to break a five-day losing streak. []
The recovery in equities is supporting gold, as investors
are under less pressure to sell the precious metal to cover
losses on the stock markets.
Oil prices also ticked higher, rising by more than $1 a
barrel, tracking a rebound in stock markets. Firmer crude prices
typically support gold, which is often bought as a hedge against
oil-led inflation. []
PLATINUM, PALLADIUM JUMP
Platinum rebounded, climbing by 6 percent to its session
high of $821.50, as the softer dollar boosted interest in the
precious metal.
The metal was pressured to five-year lows on Monday amid
fears over falling demand from carmakers, who account for around
half of annual platinum consumption.
Major platinum producer Aquarius Platinum Ltd <AQP.AX> said
in its first-quarter earnings report it has closed a shaft of
its Marikana mine for care and maintenance against a backdrop of
falling prices. []
"This might help turn attention back onto supply-side
issues," said Tom Kendall, precious metals strategist at
Mitsubishi Corp. "Though undoubtedly (there is) more bad news to
come from auto sector too in the weeks ahead."
Traders are also awaiting results from the world's number
three platinum miner Lonmin <LMI.L> later in the week.
Spot platinum <XPT=> was quoted at $794.50/814.50 an ounce,
up from $772.50 in late New York trade on Monday. Palladium
<XPD=> climbed 5 percent to a session high of $177.50 an ounce
before being quoted at $177/187 an ounce at 1421 GMT, up from
$167.50.
Spot silver <XAG=> dipped to $8.87/8.96 an ounce from $9.01.
Holdings of the world's largest silver-backed exchange-traded
fund, the iShares Silver Trust <SLV.A>, fell a further 1 pct on
Monday and are down 144 tonnes week-on-week. []
(Reporting by Jan Harvey; editing by Peter Blackburn)
