* Dollar turns lower vs euro, oil above $72
* Traders say jewellery demand improves after weak year
* Palladium firm after climb to 13-1/2-month highs
(Releads, updates prices)
By Jan Harvey
LONDON, Oct 12 (Reuters) - Gold prices rose back above
$1,055 an ounce on Monday as the dollar turned lower against the
euro, adding to upward pressure from rising oil prices and
improving jewellery demand.
Spot gold <XAU=> rose to $1,055.40 an ounce at 1030 GMT, up
from $1,048.25 late in New York on Friday but off the record
high $1,061.20 set last week.
The U.S. currency firmed on Monday as investors trimmed
dollar-selling positions on caution that U.S. interest rates
could rise, but surrendered gains against the euro <EUR=> later
in the day as European stocks rose. []
Dollar weakness typically boosts gold, both because it makes
the metal cheaper for holders of other currencies, and as it
increases the appeal of the metal as an alternative asset.
"The dollar is again being supportive, as it is off a little
against the euro this morning," said Societe Generale analyst
David Wilson. "We have heard about some seasonal recovery (in
physical demand) in India, but it is coming off a low base."
Jewellery buying -- which accounted for more than half of
total gold production last year -- has been weak in 2009 due to
high prices. But it is recovering as festival season gets
underway in key bullion consumer India.
Rising crude prices also boosted interest in gold as an
inflation hedge. Oil rose close to $73 a barrel amid optimism
over the pace of the global economic recovery and after a
positive demand forecast from the International Energy Agency.
[]
"Some positive impetus is coming from the oil price, which
(is stabilising) above $70 a barrel," said Alexander Zumpfe, a
trader at precious metals house Heraeus.
ETF DEMAND MUTED
Demand for the precious metal from exchange-traded funds was
muted. The largest, New York's SPDR Gold Trust <GLD>, reported
no fresh inflows on Friday. []
But non-commercial net long positions in COMEX gold futures
rose to an all-time high of 239,668 lots in the week ended Oct.
9, up 3.6 percent from a week before, data from the U.S.
Commodity Futures Trading Commission showed. []
In supply news, South African producer DRDGold <DRDJ.J> said
miners had resumed work at its Blyvoor mine after a three-week
wage strike. []
U.S. gold futures for December delivery <GCZ9> on the COMEX
division of the New York Mercantile Exchange rose $8.10 to
$1,056.70 an ounce.
Among other precious metals, silver edged higher, supported
by gains in base metals. Silver is widely used in industry,
predominantly electronics manufacturing, as well as being an
investment vehicle.
Spot silver <XAG=> was at $17.87 an ounce against $17.67.
Platinum <XPT=> was at $1,333.50 an ounce against $1,332, while
palladium <XPD=> was at $320 against $317.50.
Palladium climbed to its highest level since August 2008 on
Friday, supported by concerns over tightness in Russian supply,
traders said, and by strong technical support.
"With palladium having rallied over 100 percent off its lows
of last year and trading on its highs of this year, it might be
supposed that it is time to start fishing for a top," said
technical analysts at Barclays Capital in a note.
"However, the absence of strong signs for an important high
suggests the opposite; we should stay bullish."
Support for the metal stood at $316 an ounce, they said.
(Editing by Sue Thomas)
