* Dollar at 8-week low vs euro, 2009 low vs currency basket
* Equities, oil climb as risk appetite sharpens
* Palladium hits 7-week high; platinum near 6-week peak
(Updates throughout, changes dateline-pvs TOKYO)
By Jan Harvey
LONDON, July 28 (Reuters) - Gold firmed in Europe on Tuesday as the dollar weakened, with fresh gains in equity markets boosting appetite for assets seen as riskier, while platinum and palladium held near multi-week highs.
Spot gold XAU= was bid at $954.00 an ounce at 0904 GMT, against $952.65 an ounce late in New York on Monday. U.S. gold futures for August delivery GCQ9 on the COMEX division of the New York Mercantile Exchange rose $1.40 to $954.90 an ounce.
Spot prices remained within a narrow $945-960 range for a sixth consecutive session, as investors stayed on the sidelines during the seasonally weak summer period.
Standard Bank analyst Walter de Wet said the longer gold remained confined to its current range, the greater the possibility of it eventually breaking lower.
"At these levels the bias is the downside for gold," he said. "It is going to be tough for gold to move higher."
"If the dollar continues to soften it is going to support the gold price, but even then, if we close in on $1,000 an ounce...we will see a reaction from the physical side and more scrap coming onto the market," he said.
The dollar slid to an eight-week low against the euro EUR= and its weakest this year versus a basket of currencies .DXY as rising risk appetite demonstrated by a fresh rise in equity markets boosted buying of currencies seen as higher risk. [FRX/]
Gold, like other dollar-priced commodities, becomes cheaper for holders of other currencies as the U.S. unit weakens. Dollar weakness can also prompt buying of hard assets such as bullion.
European shares rose in early trade. Rising stock markets are underpinning hopes the worst of the financial downturn may be over, boosting risk appetite. [MKTS/GLOB]
This has helped oil prices post their most sustained rally since June 2008. Rising crude prices can lift gold, which is often seen as a hedge against oil-led inflation. [O/R]
RANGEBOUND
Holdings of the world's largest gold exchange-traded fund, the SPDR Gold Trust GLD, were unchanged for a third day on Monday, while those of ETF Securities three gold-backed ETFs declined nearly 25,000 ounces or 0.3 percent. [GOL/SPDR]
The smaller platinum group metals, palladium and rhodium, performed strongly on Tuesday after their sister metal platinum hit a six-week high on Monday as the weaker dollar and strength in gold prices underpinned gains.
Palladium XPD= climbed to a near seven-week high of $261.50 an ounce on Tuesday, tracking platinum higher, while rhodium RHOD-LON rose another $75 to $1,675 an ounce.
All three metals, which are primarily used in the auto industry as components in catalytic converters, have suffered from a fall in car demand over the last year, but are showing tentative signs of recovery.
"Platinum prices are still rising alongside other precious metals, while outpacing gold on the back of its industrial appeal," said VTB Capital analyst Andrey Kryuchenkov in a note.
"Key resistance is now at $1,220, and we expect equities to dictate direction for the rest of the week," he added.
Platinum XPT= was at $1,207 an ounce against $1,215, while palladium was at $261 against $259. Elsewhere silver XAG= was at $14.02 an ounce versus $14.01, having earlier matched the previous session's four-week high of $14.08. (Reporting by Jan Harvey; Editing by Sue Thomas)
