* Euro hits six-month low vs dollar after weak data
* Oil up over $2 a barrel on hurricane-related supply fear
(Recasts, updates prices, market activity to late New York
trade; adds second byline, dateline, previously LONDON)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Aug 26 (Reuters) - Gold ended higher on
Tuesday as hurricane worries pushed crude oil higher, prompting
buying of bullion that more than offset selling related to a
dollar rally.
Gold <XAU=> was last at $822.90/824.30 at 2:15 p.m. EDT
(1815 GMT), up from $820.20/821.40 an ounce late in New York on
Monday.
"Everything is being led by external factors" such as oil
and currencies, said VM Group analyst Matthew Turner.
Amid fears that Hurricane Gustav could disrupt output at
key U.S. oil installations in the Gulf of Mexico, crude oil
prices rose more than $2 a barrel. This supported buying of
gold as a hedge against oil-led inflation.
Before rallying with oil, gold had dropped as low of
$806.70 after the dollar scaled six-month peaks, sending the
euro below $1.46. A jump in U.S. consumer confidence and
expectations of interest rate cuts in the euro zone following
weak German data buoyed the greenback. []
"We saw a very sharp move this morning in favor of the
dollar, which has accelerated what has been a recent trend in
dollar strength against the euro," Fairfax analyst John Meyer
said.
A stronger dollar pressures gold, making the precious metal
more expensive for holders of other currencies. Also, gold
often is bought as a hedge against weakness in the greenback.
An upsurge in physical demand for jewelry, coins and bars
added some support to gold, although this was unlikely to
counteract the effects of the strengthening dollar.
Jonathan Jossen, COMEX gold options floor trader in New
York, said real demand could be seen for gold, but central bank
selling has taken a toll on momentum.
On Tuesday, Sweden's central bank said it would sell up to
15 tonnes of gold over the 12 months to Sept. 26, 2009 and use
proceeds to boost foreign currency reserves. []
Demand was expected to pick up in the world's biggest gold
market, India, ahead of the Hindi festival of Diwali in
October.
Among other precious metals, silver <XAG=> climbed to
$13.54/13.62 an ounce from $13.37/13.43 an ounce late in New
York.
Holdings of the largest silver-backed exchange-traded fund,
New York's iShares Silver Trust <SLV.A>, have risen to a record
6,474 tonnes despite the metal's recent price slide.
"We continue to think that silver prices are extremely
vulnerable to any liquidation from the iShares silver ETF,
which last week increased to a record size," said JP Morgan
analyst Michael Jansen in a note.
"As such we continue to strongly believe that selling
rallies is a very compelling risk/reward trade in silver
especially, and in gold generally."
Platinum and palladium were relatively steady after
recently suffering sharp falls.
Spot platinum <XPT=> ended lower at $1,409.50/1,429.50 an
ounce from $1,420/1,440 late in New York, while palladium
<XPD=> was lower at $282/290 an ounce from $285/293 an ounce,
its Monday U.S. close.
