* Dollar softer versus euro as risk appetite returns
* Traders await ECB rate decision for fresh direction
* Platinum, palladium firm ahead of U.S. car sales data
(Recasts, adds comment, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Nov 3 (Reuters) - Gold rose more than 1 percent in
Europe on Monday as the dollar softened against the euro,
boosting interest in bullion as a currency hedge, with firmer
equity markets also cheering investors.
Spot gold <XAU=> climbed to $733.45/735.45 an ounce at 1005
GMT from $723.05 late in New York on Friday. The yellow metal
posted its biggest monthly decline in 25 years in October as the
firmer dollar pressured prices.
"The reason gold is rising is because the dollar is weaker
and equity markets are stronger," said Deutsche Bank trader
Michael Blumenroth. "The daily ranges are becoming smaller and
the market is becoming a little more relaxed now."
The dollar has been pressured by a return in risk appetite,
analysts said, after recording its biggest montly gain in more
than 17 years in October. []
Gold usually moves in the opposite direction to the U.S.
currency, as it is often bought as an alternative investment to
the dollar.
Traders will be keeping a close eye on a raft of interest
rate decisions due later in the week for clues to the direction
of the gold market.
The European Central Bank on Thursday is due to announce its
decision on euro zone interest rates -- expected to be a 50
basis point cut -- while the Bank of England and the Reserve
Bank of Australia are also expected to announce cuts this week.
"While the currency market remains extremely volatile, all
eyes will likely be on the ECB and BoE interest rate decisions
later this week," Standard Bank analyst Walter de Wet said.
"The market expects both central banks to cut rates by 50
bps (basis points) -- a move which could see the euro and
sterling on the back foot."
In addition to currencies, traders will also be watching
gold's other main external driver, the crude oil market.
Prices were softer on Monday, with U.S. crude futures
dipping more than $1 a barrel as investors switched their
attention back to slowing energy demand. []
Weaker crude prices tend to pressure gold, which benefits
from interest in the metal as a hedge against inflation.
PLATINUM, PALLADIUM FIRM
The equity markets' firmer tone is also boosting interest in
precious metals. MSCI's all-country world stock index
<.MIWD00000PUS> was up almost 11 percent last week and rose 1
percent on Monday. []
Europe's FTSEurofirst 300 <> rose 0.5 percent in early
trade, reflecting gains ovenight in Asia.
The platinum group metals were firmer as the market awaited
U.S. auto sales figures later in the session.
Both platinum and palladium have shed more than half their
value in the last three months as investors fretted about the
outlook for demand from carmakers, the main consumers of the
precious metals.
Soft auto sales numbers in recent months have sparked heavy
selling of the PGMs, more than half of which are consumed by the
car industry each year.
"We expect another decline in sales which could put downward
pressure on PGM prices," said Standard Bank's de Wet.
Spot platinum <XPT=> edged up to $821.50/851.50 an ounce
from $813 an ounce late in New York on Friday, while spot
palladium <XPD=> firmed to $197/202 from $193.50.
Among other precious metals, spot silver <XAG=> was at
$10.05/10.15 against $9.81 an ounce.
(Reporting by Jan Harvey; editing by Karen Foster)
