* Gold rises 1 pct as investors take advantage of low prices
* Platinum, palladium climb as Lonmin bid boosts confidence
* SPDR Gold Trust New York holdings slip 2.2 percent
(Recasts, updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Aug 6 (Reuters) - Gold rose 1 percent in Europe on
Wednesday as investors took advantage of a three-day fall in
prices to buy below the key $900 an ounce support level.
Platinum also recovered after a sharp dip, which saw the
white metal shed more than 10 percent in three sessions, as
Xstrata's $10 billion bid for Lonmin boosted confidence in the
market and a strike began in major producer South Africa.
Gold <XAU=> rose to $883.80/884.80 an ounce at 1014 GMT from
$876.35/877.95 late in New York on Tuesday.
"Clearly there is some opportunistic buying going on at the
moment," said Daniel Hynes, metals strategist at Merrill Lynch.
"We have seen numerous times over the past six months that
$900 an ounce is a key support level, and whenever gold has
fallen below that it has recovered relatively quickly."
The dollar retreated from seven-week highs against the euro
after the Federal Reserve intimated, after leaving interest
rates on hold at 2 percent late Tuesday, that it is in no hurry
to hike rates. []
A softer dollar will ease downward pressure on gold, which
is often bought as a hedge against weakness in the currency.
Gold slipped more than $20 an ounce on Wednesday as part of
a broader sell-off of commodities, led by crude oil. There are
signs that investment demand may be softening.
The largest gold-backed exchange traded fund, New York's
SPDR Gold Trust <GLD>, said its gold holdings fell 15 tonnes or
2.3 percent on Tuesday to a one-month low of 659.31 tonnes.
The fund's gold holdings are now nearly 7 percent below
their all-time peak above 700 tonnes on July 21.
PLATINUM REBOUNDS
Platinum prices rebounded, helped by Anglo-Swiss miner
Xstrata's <XTA.L> $10 billion bid for the world's third biggest
platinum producer, Lonmin <LMI.L>. []
Platinum rose more than 3 percent, and palladium 5 percent,
as traders saw the bid as a vote of confidence in the future of
the platinum market.
"Platinum has been buoyed by interest in the sector (linked
to) Xstrata's bid for Lonmin," said Commerzbank trader Rory
McVeigh. "It shows a more positive view of the platinum
situation in South Africa."
Meanwhile a one-day strike started in South Africa, source
of four out of five ounces of the world's platinum.
Anglo Platinum <AMSJ.J>, the world's top producer of the
precious metal, said some of its mines and a smelter had been
affected by the strike. []
Gold producers Harmony <HARJ.J>, Anglogold Ashanti <ANGJ.J>
and Gold Fields <GFIJ.J> all said their production had been hit.
Daniel Hynes said the disruptions would normally have been
much more supportive for platinum, but that the negative demand
outlook from the automotive sector was capping any gains.
He added, however: "The strike, and Xstrata's bid for Lonmin
this morning, does suggest that there are still a lot of people
who think the platinum market has a lot better times ahead."
Spot platinum <XPT=> hit a high of $1,615.50 ounce before
easing to trade at $1,611.00/1,631.00 against $1,563.00/1,583.00
late in New York on Tuesday.
Spot palladium <XPD=> rose to a session high of
$371.00/385.00 an ounce from $346.00/354.00 in New York.
Silver <XAG=> climbed to $16.64/16.70 an ounce from
$16.45/16.53 late in New York.
(Reporting by Jan Harvey; Editing by Michael Roddy)
