* Gold rises 2 percent as the dollar falls, oil gains
* Platinum jumps after hitting 3-week low
* Physical buying supports gold, but investors cautious
(Recasts, updates prices and comments, pvs SINGAPORE)
By Humeyra Pamuk
LONDON, Nov 21 (Reuters) - Gold gained 2 percent on Friday,
as the dollar weakened against the euro and oil prices climbed
higher, while platinum rallied more than 6 percent in erratic
trade.
Gold rose to a session-high of $760 an ounce and was
at $757.90 an ounce by 1105 GMT, versus $745.10 an ounce late in
New York on Thursday.
Gold was 28 percent below a lifetime high of $1,030.80
struck in March, which it has been unable to revisit after
selling choked off recent rallies. It hit a two-month high of
$931 in October but losses in equities forced investors to cash
in to cover losses.
"Gold is tracking the movements in the dollar," said analyst
Michael Widmer at BNP Paribas, adding stronger oil prices have
also helped gold to rise higher.
The euro climbed 0.6 percent against the dollar to $1.2530
and the dollar index .DXY lost almost 1 percent as a rebound
in global stocks from the previous day's rout curbed investors'
demand for the Japanese and U.S. currencies. [FRX/]
Gold tends to move in the opposite direction to the dollar,
as a strong U.S. currency makes bullion more expensive for local
currency holders.
Oil rose above $50 a barrel, rebounding from a three and
half year low and buoyed by rallies in Europe and Asian equities
on talk that China may cut interest rates later in the day.
The World Gold Council said investment demand rose 56
percent to 382.1 tonnes for the third quarter of this year as
heightened levels of economic and financial uncertainty stirred
safe-haven buying.
The council said the global demand for gold was expected to
be steady around 843 tonnes in the fourth quarter of 2008 on
festive demand and buying from investors.
But analysts remained cautious.
"Prices have rallied strongly this morning as the dollar
weakened," said John Meyer, the head of resources at UK-based
investment bank Fairfax. "We remain cautious near term and would
not be surprised to see the metal pull back below $750 an
ounce."
Platinum jumped more than 6 percent on
bargain-hunting, after falling to a three-week low of $759 an
ounce in Asian trade as weak demand from the auto industry
continued to weigh on prices.
The metal, used mainly in autocatalysts to clean exhaust
fumes, was trading at $791.50 an ounce, up from $762.50 an ounce
in New York's on Thursday.
Honda Motor Co (7267.T: Quote, Profile, Research, Stock Buzz) said it would build fewer cars in
Japan, Europe and North America to reflect an increasingly bleak
outlook for sales as the global economic crisis discourages
big-ticket purchases. [ID:nT41789]
"The price falls could lead to some supply side responses,
but overall people in the market are mainly concerned about the
demand, which is relatively weak," Widmer at BNP Paribas said.
New York gold futures GCZ8 rose $10.2 an ounce to $758.7.
Silver was at $9.18/9.26 from $8.95 and palladium
at $177.50 from $173.
(Editing by Karen Foster)
