LONDON: Gold gained on Wednesday as a weaker dollar boosted prices, while expectations of improving demand and investor cash pushed palladium to a two-year high. Palladium, mainly used in auto catalysts, jumped to its highest in two years on fund buying driven by hopes that demand for platinum group metals (PGMs) could outstrip supply. "It is the dollar that is mostly moving the markets," Eugen Weinberg, a commodity analyst at Commerzbank said. "Palladium is still in favour. It is a standout metal this year." "This is due to automotive demand and economic recovery and investment demand," he added. "Since December 2008, palladium is up over 200 percent (and) naturally after such a move, it wouldn't be surprised to see profit taking." He added strong Asian currencies after Singapore's aggressive monetary tightening was also lifting bullion prices. Strength in the dollar curbs gold's appeal as an alternative asset and makes commodities priced in the U.S. unit more expensive for holders of other currencies. On the economic calendar, earnings from bank JP Morgan Chase and U.S. consumer and retail numbers will be watched ahead of testimony from Federal Reserve Chairman Ben Bernanke and the Fed's Beige Book. Investors are also awaiting Thursday's GDP data from China, the world's second-largest bullion buyer.

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