* 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
(Updates prices, adds comment)
By Jan Harvey
LONDON, Oct 12 (Reuters) - Gold prices held above $1,050 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 $1,053.35 an ounce at 1317 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 gave up its early gains against the euro
after European shares rose more than 1 percent, prompting some
demand for riskier assets. []
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," 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, dealers say.
[]
Rising crude prices also boosted interest in gold as an
inflation hedge. Oil rose above $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. []
"As long as gold is on the rise and the most recent long
positions remain in profit, this does not represent a risk
factor just yet," said Commerzbank in a note.
"However, there is the risk that speculators will square
their long positions and, in this case, one should expect a
price correction. This will become a real risk only once the
gold price has fallen below the $1,000 per ounce threshold."
U.S. gold futures for December delivery <GCZ9> on the COMEX
division of the New York Mercantile Exchange rose $6.10 to
$1,054.70 an ounce.
Among other precious metals, silver firmed, supported by
gains in base metals. Silver is widely used in industry, chiefly
electronics manufacturing, as well as being in investment.
Spot silver <XAG=> was at $17.82 an ounce against $17.67.
Platinum <XPT=> was at $1,338 an ounce against $1,332, while
palladium <XPD=> was at $321.50 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."
(Editing by xxx)
