* Dollar-priced commodities lifted by U.S. currency weakness
* Oil hits seven-month high above $71/bbl
* ETFS Physical Platinum ETF up 3.3 pct on Tuesday
(Updates throughout, changes dateline from TOKYO)
By Jan Harvey
LONDON, June 10 (Reuters) - Gold rose back above $960 in
Europe on Wednesday as fresh dollar weakness prompted buying of
the precious metal as a currency hedge and as oil prices rose to
a new seven-month high.
Silver, platinum and palladium all tracked gold up, with
dollar-priced commodities benefiting from the U.S. unit's slip,
which makes them cheaper for holders of other currencies.
Spot gold <XAU=> was bid at $961.40 an ounce at 0854 GMT,
against $953.75 an ounce late in New York on Tuesday.
"Some buying came back into gold and silver yesterday
afternoon when the dollar weakened," said Alexander Zumpfe, a
trader at precious metals house Heraeus.
"Additional support came from the stronger oil price, which
is on levels not seen for several months."
The dollar <.DXY> slipped against a basket of currencies on
Wednesday, extending the previous session's losses, as investors
questioned whether the U.S. economy was sufficiently recovered
to justify talk of a Federal Reserve rate hike.
The U.S. unit weakened to $1.41 versus the euro. Traders are
awaiting the release of the Fed's Beige Book of regional
economic conditions later in the session, which may offer fresh
clues on the outlook for interest rates, for direction.
Oil meanwhile climbed 2 percent to a high of $71.65 a
barrel, its firmest since early November, boosted by a larger
than expected fall in crude stocks and a forecast that falling
demand could be bottoming out. []
Strength in crude prices is a key indicator of interest in
commodities as an asset class and can fuel buying of gold as an
inflation hedge.
TECHNICAL
"Oil and the weak U.S. dollar are the driver again," said
senior Commerzbank trader Michael Kempinski. "If we stay above
$960, it looks much better on the technical side as well for
gold, and we might try the upside again the next days."
Nonetheless soft physical demand for the precious metal
could threaten the rise. Inflows into gold exchange-traded funds
have largely bottomed out, with the largest, SPDR Gold Trust,
reporting no change in its holdings. []
"Physical demand remains weak and I think that metals look a
bit toppish up here," said Zumpfe at Heraeus.
Meanwhile European equities opened higher, with energy
companies leading on strength in crude prices and banks gaining.
Shares rose in Asia as reports of above-consensus Chinese
industrial output cheered investors. []
Among other precious metals, silver <XAG=> firmed to $15.36
an ounce against $15.21. Platinum <XPT=> was at $1,266.50 an
ounce against $1,247, while palladium <XPD=> was at $256 against
$252.50.
Investment interest in platinum remained buoyant. ETF
Securities reported a fresh 11,000-ounce inflow into its ETFS
Physical Platinum fund on Tuesday, meaning its holdings are now
up 15 percent week-on-week. []
(Reporting by Jan Harvey; Editing by Anthony Barker)
