* 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
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By Jan Harvey and Kylie MacLellan
LONDON, June 10 (Reuters) - Gold extended gains in Europe on
Wednesday as the dollar weakened on news Russia plans to cut the
proportion of U.S. Treasuries in its reserves, 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 $962.85 an ounce at 1131 GMT,
against $953.75 an ounce late in New York on Tuesday. The metal
hit $965.25 as the dollar extended losses after Russia announced
its reserves plans.
"We are seeing oil and euro/dollar being, to a certain
extent, driven by the fact that we are still seeing a recovery
slowly coming in," said Ole Hansen, analyst at Saxo Bank.
"(Gold) is primarily just following the dollar, because it
hasn't really got a mind of its own at the moment," he added.
"The whole safe haven thing that has been a driving factor
previously, it is obviously not that at the moment."
The dollar <.DXY> had already fallen against higher-yielding
currencies, prodded lower by a retreat in risk aversion as
global stock prices were lifted by investor optimism about an
improvement in the global economy. []
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 $71.39 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.
European equities were higher at midday, with energy
companies leading on strength in crude prices and banks gaining,
while U.S. stocks futures pointed to a higher open on Wall
Street. []
TECHNICAL
"Oil and the weak U.S. dollar are the drivers 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 Alexander Zumpfe, a trader at
precious metals house Heraeus.
Among other precious metals, silver <XAG=> firmed to $15.44
an ounce against $15.21. Platinum <XPT=> was at $1,267.50 an
ounce against $1,247, while palladium <XPD=> was at $258.50
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. []
(Editing by Keiron Henderson)
