* Dollar index weakens as risk aversion recedes
* Equities rise in Asia and Europe, commodities higher
* Coming up: U.S. June ISM non-manufacturing index, 1400 GMT
(Updates prices)
By Jan Harvey
LONDON, July 6 (Reuters) - Gold rose back above $1,210 an
ounce in Europe on Tuesday as physical demand for the precious
metal recovered after last week's price dip, and as the weaker
dollar encouraged some buying.
Spot gold <XAU=> was bid at $1,210.15 an ounce at 1137 GMT,
against $1,206.95 late in New York on Monday. U.S. gold futures
for August delivery <GCQ0> firmed $2.30 an ounce to $1,210.00.
The metal benefited from dollar weakness, which boosts its
appeal as an alternative investment and makes dollar-priced
assets more expensive for other currency holders. The dollar
fell 0.3 percent versus a currency basket early on Tuesday.
The usual inverse relationship between gold and the dollar
broke down earlier in the year as both benefited from extreme
risk aversion, but it has shown signs of re-emerging as euro
zone sovereign debt concerns recede. []
"The relationship between gold and the dollar has been very
frenetic of late," said Daniel Major, an analyst at RBS Capital
Banking & Markets. "Particularly in the last week, you saw a $20
fall in gold on a day when the currencies were supportive."
"(But) in the short term, the intraday chart of the
euro-dollar versus gold is tracking perfectly."
The dollar retreated after an upbeat assessment of the
global economy by the Reserve Bank of Australia stoked
short-covering demand for higher-risk currencies. []
Global risk appetite was improving on Tuesday, having taken
a beating in the past few weeks on growing worries about the
health of the euro zone's banking system, a slowdown in China
and risks of a double-dip recession in the United States.
European shares were sharply higher at midday on Tuesday in
a broad rally, which strategists said was due to stocks becoming
cheap after a period of weakness. []
COMMODITIES TICK UP
Among other commodities, oil rose more than 1 percent from
Tuesday's trough, as the dollar tumbled and Asian stock markets
rebounded amid easing concern about the slowdown in the global
economic recovery, while base metals rose. [] []
Traders are now looking ahead to the U.S. Institute for
Supply Management's non-manufacturing index for June, due at
1400 GMT, for its impact on the dollar, which has lost ground to
the euro as fears over euro zone sovereign debt issues lighten.
"It will only take a sequence of better-than-expected U.S.
data releases to force the market once again into a game of
relative merits, one which the euro will struggle to win," said
Credit Agricole in a note.
Physical gold demand picked up a touch after last week's
correction from record highs, as the metal became more
affordable for buyers.
Indian buying continued as traders in the world's biggest
gold consumer picked up bargains ahead of a second round of
festivals and watched the rupee for direction, dealers said.
[]
Silver <XAG=> was at $17.82 an ounce versus $17.75, platinum
<XPT=> at $1,520 an ounce against $1,506.50 and palladium <XPD=>
at $436.33 versus $428.
"Since late May, a significantly lower platinum price has
prompted very real demand, both industrial and for jewellery,"
said UBS analyst Edel Tully in a note.
"Chinese jewellery demand -- as measured through platinum
turnover on the Shanghai Gold Exchange -- has been particularly
apparent since mid May."
(Editing by Sue Thomas)
