LONDON (Reuters) - Gold extended gains by more than 1 percent on Thursday, tracking losses in the dollar, after posting its biggest percentage climb in almost three weeks the previous session.
Platinum and palladium also ticked higher but remained rangebound as traders awaited the outcome of Congress' discussions of a $14 billion (9.4 billion pounds) plan to bail out U.S. carmakers.
Spot gold was quoted at $822.10/824.10 an ounce at 10:17 a.m., up from $809.90 an ounce late in New York on Wednesday, when the precious metal climbed 4 percent on rising oil prices and dollar weakness.
"The main driver yesterday was the dollar, and this morning it has weakened again. That is supporting gold," said BNP Paribas analyst Michael Widmer. "You would expect gold prices to perform well in an environment of a falling dollar."
The precious metal is often bought as an alternative asset to the U.S. currency and tends to move in the opposite direction to it.
The dollar hit a six-week low against the euro, as doubts crept in over whether projected pent-up demand for the currency would materialise over year-end.
The other main external driver of gold, the oil price, was also supportive, ticking up nearly 3 percent as signs emerged that top exporter Saudi Arabia had slashed January supplies ahead of next week's meeting of oil cartel OPEC.
Crude also received a fillip from the International Energy Agency's monthly report, which said it saw global demand growing in 2009 and expected OPEC to cut supplies next month .
Rising oil prices help support interest in commodities as an asset class, and can boost gold's appeal as an inflation hedge.
"Precious metals may get further support today if such oil price volatility is repeated," said Standard Bank analyst Manqoba Madinane.
SHARES SLIP
However, soft equity markets may keep a lid on gold's gains.
European shares were lower in early trade as worries over the health of the global economy weighed, and as investors awaited the outcome of a $14 billion U.S. proposal to bail out carmakers.
The proposal passed the House of Representatives but is likely to hit resistance in the Senate.
Platinum and palladium traders in particular awaited the outcome of the plan. Carmakers account for more than half of annual global consumption of the metals, which are chiefly used in the manufacture of catalytic converters.
Until more definite news on the bailout package emerges, the metals are likely to remain rangebound, analysts said.
"With the final decision on the U.S. bailout packages now unlikely till after the weekend it is more than likely platinum will remain in the $780-882 range," noted James Moore, an analyst at TheBullionDesk.com.
Spot platinum was quoted at $834.50/854.50 an ounce, up from $822 an ounce late in New York on Wednesday. Palladium was at $180/185 an ounce against $177.50.
Among other precious metals, spot silver rose to $10.40/10.48 an ounce from $10.21.
(Reporting by Jan Harvey; editing by William Hardy)
