By Clementine Wallop Of DOW JONES NEWSWIRES SINGAPORE(Dow Jones)--Gold prices rose in Asian trading Monday as a softer dollar boosted buying activity from investors keen for exposure to the metal as a safe store of value. Gold traded as high as $1,653.72 a troy ounce as the euro gained against the greenback after French President Nicolas Sarkozy and German Chancellor Angela Merkel promised they would announce a plan to shore up Europe's struggling banks by the end of the month. The euro was trading at $1.3477 at 0530 GMT compared with $1.3375 late Friday in New York. Dollar-priced commodities become cheaper to investors holding other currencies when the greenback is weak. Gold was trading at $1,651.56/oz, up $12.86 from its previous close. A Hong Kong-based trader said gold is likely to extend its gains in the near term, tipping support at $1,550/oz. The market has been "amazingly stable" since the start of October given the lingering concerns over the euro-zone debt crisis, he said. "There are still substantial longs in gold from hedge funds and from exchange-traded funds," he said. Credit Agricole analyst Robin Bhar said in a report that resurgent Asian physical demand is also lending support to the market. "Intraday price volatility has subsided sharply, a major factor in giving the bulls enough confidence to re-enter the market against a background of very active physical buying," he said, noting steady demand in Hong Kong and Singapore. Gold bar supply is tightening in both cities and premiums stand at their highest level since February, he said. The Hong Kong-based trader warned that forecasting gold's near-term direction has become difficult since September's heavy selling that saw the metal shed 11.0% of its value amid extreme market volatility. "It's changing color all the time; sometimes it's a safe-haven, sometimes it's a risky asset," he said. In the longer term, gold will trend higher as investors seek hedges against inflation, he said. Silver prices rose in line with gold, trading as high as $31.96/oz on increased buying activity. MKS Finance said the grey metal's technical picture is improving, and that a break back through $33.60/oz could signal "an aggressive move higher". Silver was trading at $31.80/oz, 53 cents up from its previous close. Platinum prices traded $20 higher at $1,514/oz, and palladium rose $8.50 to $594.50/oz. -By Clementine Wallop; Dow Jones Newswires; 65 46154 082; clementine.wallop@dowjones.com

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