(Recasts, adds comment/detail, changes dateline, pvs TOKYO)
By Jan Harvey
LONDON, June 3 (Reuters) - Gold climbed on Tuesday as the
dollar softened on worries over the deteriorating health of the
U.S. economy, boosting the precious metal's appeal as an
alternative investment.
Gold is often bought as a hedge against a weakening dollar,
and also becomes cheaper for holders of other currencies when
the greenback loses value.
Spot gold <XAU=> was at $893.60/894.65 an ounce at 1020 GMT
versus $891.25/892.65 late in New York on Monday. Earlier it
touched an intraday high of $897.10.
"This is basically a reaction to the (stronger) euro," said
Fortis Bank precious metals director Gerry Schubert. "The
weakening dollar is supporting gold at this time."
The U.S. currency slipped against the euro after news U.S.
investment bank Lehman Brothers was seeking to raise up to $4
billion in new capital triggered concern about global financial
stability. []
Investors also use gold as a hedge against equity market
volatility.
Stock markets in Europe, the United States and Asia were
knocked lower yesterday after Standard & Poor's downgraded a
number of investment banks and the UK's Bradford & Bingley
issued a profit warning, reigniting fears over the scope of the
credit crunch.
CLUES
The gold market is now awaiting comment from Federal Reserve
chief Ben Bernanke for clues to future direction in currency and
precious markets.
Bernanke is due to deliver a speech on the U.S. economic
outlook at 1300 GMT. The market will be seeking guidance on the
liklihood of interest rate moves later in the year.
Durable goods orders and factory orders from the United
States later could also make currency and precious metals
markets volatile, traders said.
"U.S. factory orders might surprise the consensus to the
upside, which could be negative for gold as speculation on a Fed
rate hike later this year might intensify," said Dresdner
Kleinwort analyst Peter Fertig in a note.
Comments from the European Central Bank over inflation in
recent days are still lending good support to the euro, said
Schubert at Fortis Bank.
In other news, data from the Istanbul Gold Exchange showed
Turkey's gold imports reached 19.4 tonnes in May after dropping
off sharply in the two previous months as high prices hit sales.
However, in the first five months of the year, imports are
still well down on the previous year, off 28.8 percent at 52.7
tonnes.
Platinum <XPT=> rose to $2,015.00/2,025.00 an ounce from
$2,000/2,020 in New York.
The metal is underpinned by supply concerns, after Aquarius
Platinum said on Monday that a strike at its Everest mine would
cost the producer some 1,300 ounces of metal.
Prices should remain well supported between $1,976 and
$2,000 today, Standard Bank said.
Platinum spiked to a new all-time high earlier this year
amid fears of electricity shortages in South Africa, the world's
largest producer, would cause a major supply shortfall.
Palladium <XPD=> was at $432.50/437.50 an ounce versus
$431/439.
Silver <XAG=> was a touch lower at $16.76/16.82 an ounce
versus $16.81/16.87 late in New York.
(Editing by Christopher Johnson)
