* Gold climbs as rising oil boosts interest in commodities
* Weaker dollar spurs investment in gold as currency hedge
* Platinum rebounds from 11-week lows on bargain hunting
(Recasts, updates throughout, pvs SINGAPORE)
By Jan Harvey
LONDON, July 21 (Reuters) - Gold rose more than 1 percent in
Europe on Monday as oil prices firmed after talks between Iran
and world powers over the Islamic Republic's nuclear programme
ended in stalemate, and as the dollar weakened against the euro.
Gold <XAU=> rose to $964.65/965.65 an ounce at 0911 GMT from
$955.45/957.05 an ounce late in New York on Friday, when it fell
to a one-week low of $949.50. Earlier on Monday it touched a
session high of $968.25.
With producer de-hedging dying down and interest in physical
gold lighter in the summer months, the external drivers of gold
-- chiefly oil and the dollar -- are likely to continue
outweighing fundamentals in the weeks to come, traders said.
"The physical side of the market is very quiet, and after
all these big buy-backs in recent months we are not going to see
a lot of demand from miners," said Wolfgang Wrzesniok-Rossbach,
head of sales at precious metals trading group Heraeus.
"That leaves us with the speculators, and they are
immediately reacting to whatever is going on on the euro/dollar
side and the oil side."
The dollar steadied on Monday having drifted lower in Asian
trade as investors worried about the health of the U.S.
financial sector ahead of a spate of U.S. bank earnings this
week. []
Gold tends to move in the opposite direction to the dollar,
as it is bought as a hedge against weakness in the U.S.
currency. A softer greenback also makes dollar-priced gold
cheaper for holders of other currencies.
The precious metal also usually trades in line with oil,
because of its appeal as an inflation hedge and its strength in
crude prices boosts interest in commodities in general.
Oil rose more than $2 a barrel on Monday after its biggest
one-week slide on record as talks over Iran's nuclear programme
ended in stalemate, dampening hopes the row will soon be
resolved. []
Fears the talks could result in further unrest in the Middle
East are also supporting gold, which is often bought as a hedge
against geopolitical risk.
INDICATORS
Looking forward, traders will be eyeing U.S. economic data
due out later on Monday for signs as to future moves in the
foreign exchange market, and consequently in gold.
U.S. leading indicators for June are due out at 1400 GMT,
with the Chicago Fed National activity index for the same month
expected at 1230 GMT.
"Leading indicators are expected to have fallen again, which
might be supportive for gold as the Fed might keep rates
unchanged for some time to comes," said Peter Fertig, a
consultant for Dresdner Kleinwort.
Leading indicators are also expected to influence the
platinum market, analysts said, which has particularly suffered
in recent weeks from fears a U.S. economic slowdown could reduce
demand from carmakers, who are major buyers of the white metal.
Platinum prices dipped over $180 an ounce, or 9 percent,
over the course of last week on demand fears and expectations
supply disruptions linked to a power shortage in major producer
South Africa would be less pronounced than expected.
"The U.S. leading indicators index should give further clues
on economic activity," said Standard Bank analyst Manqoba
Madinane in a note. "A surprise on the upside should attract
bargain fund buying interest at current price levels."
The metal rebounded on Monday from the session low of
$1,836.50 it hit on Friday -- its weakest level since May 2 --
as investors took advantage of falling prices to buy into the
metal.
Spot platinum <XPT=> rose to $1,860.50/1,880.50 an ounce
from $1,846.50/1,866.50 late in New York on Friday.
Among other precious metals, spot palladium <XPD=> rose to
$419.00/424.00 an ounce from $411.50/419.50 late in New York,
while silver <XAG=> edged up to $18.34/18.39 an ounce from
$18.12/18.20 late in New York.
(Reporting by Jan Harvey; Editing by Editing by Peter
Blackburn)
