* Dollar slides to 14-mth lows, eyes equities for direction
* Gold technically well-placed to break previous record high
* Platinum, palladium hit multi-month highs as gold rallies
(Updates prices, adds comment)
By Jan Harvey
LONDON, Oct 20 (Reuters) - Gold held above $1,060 an ounce
in Europe on Tuesday as persistent weakness in the dollar
fuelled buying of the precious metals as an alternative asset.
Platinum and palladium reached their highest in more than a
year, buoyed by strength in gold prices and supply concerns.
Spot gold <XAU=> was bid at $1,063.00 an ounce at 1249 GMT
against $1,062.70 late in New York on Monday. U.S. gold futures
for December delivery <GCZ9> on the COMEX division of the New
York Mercantile Exchange rose $6.40 to $1,064.40 an ounce.
"The gold market really comes down to where you think the
dollar is going. We are still pretty bearish on the dollar, so
that makes us favourable to gold," said Citigroup analyst David
Thurtell.
"People are worried about debt issuance by governments,
inflation problems. It only takes a smalll allocation of fund
portfolios to gold to really lift the market. The gold market is
tiny compared to the bond and equity markets."
The dollar is under pressure from rising risk appetite --
which benefits higher-yielding currencies -- expectations low
U.S. interest rates will be sustained and questions about its
status as the global reserve currency. []
The U.S. unit slid to fresh 14-month lows against the euro,
with the single currency <EUR=> rising close to $1.50.
World stocks <.MIWD00000PUS> hit a new 12-month high on
Tuesday, fuelled by optimism over corporate earnings and the
global recovery after strong results from U.S. heavyweights
Apple <AAPL.O> and Texas Instruments <TXN.N>. []
Standard Bank analyst Walter de Wet said given the dearth of
physical demand for bullion, gold was primarily driven by the
dollar, which in turn was in thrall to sentiment on the equity
markets as earnings season advances.
"We are waiting for a whole bunch of earnings reports to
come into the market, and if the past week's reports are
anything to go by, these ones will also be positive," he said
"If you see equities rising and U.S. Treasuries being sold,
dollars will also be sold, which will make the dollar weaker."
TECHNICAL SUPPORT
Gold is technically well placed to build on the 6 percent
rally it has posted in the last month, analysts who study charts
of past price movements said.
"Gold is now in its third week of trying to break through
its $1,059/71 resistance area," Commerzbank said in a note.
"Referring to the daily chart, we can see that the market
remains bid though and that the above resistance area is
now likely to be breached," they added. "The next minor upside
target is seen at $1,079/1,082."
Gold's current record high of $1,070.40 an ounce was set
last week.
There was little reported gold buying by bullion-backed
exchange-traded funds -- a major driver of prices in the first
quarter of 2009 -- with holdings of the largest, the SPDR Gold
Trust <GLD>, unchanged for an eighth day on Monday. []
Jewellery buying in India, the world's biggest gold consumer
last year, was also lacklustre as festival season ended.
Spot silver <XAG=> was at $17.73 an ounce against $17.78.
Platinum and palladium both rose to their highest in more
than a year, with platinum hitting a 13-month high of $1,376 an
ounce and palladium reaching a peak of $335.50, its firmest
since August 2008.
Spot platinum <XPT=> was later at $1,369.50 an ounce against
$1,355.50, while palladium <XPD=> was at $334.50 against $332.
Both metals benefitted from strong underlying fundamentals,
with concern persisting over the outlook for South African
supply as the strong rand boosts producers' relative costs, and
Russian palladium supply still lacklustre.
Palladium demand is also picking up in China, analysts said.
(Editing by Anthony Barker)
