* Gold climbs on safe haven buying, rising oil
* Iran missile test-fire supports gold, crude
* Platinum recovers from two-month low
(Recasts with comment, prices, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, July 9 (Reuters) - Gold firmed in Europe on
Wednesday as reports Iran had test-fired missiles lifted oil
prices and sparked buying of bullion as a safe haven.
Gold <XAU=> rose to $924.30/925.10 at 0945 GMT from
$921.35/922.55 an ounce late in New York on Tuesday, when the
precious metal shed 1 percent to a near two-week low of $912.50
as oil prices dropped.
Iranian state media said on Wednesday the Islamic Republic
had test-fired missiles capable of reaching Israel and U.S.
bases in the Middle East. []
Oil prices climbed more than $2 as a result to a session
high of $138.28, making up some of Tuesday's $5 loss.
[]
Rising oil prices increase gold's appeal as an inflation
hedge and boost sentiment towards commodities as an asset class.
Gold prices are also climbing on safe-haven buying as a
result of rising tension in the Middle East.
"Gold benefits directly from geopolitical tension, so it
would have received support from that news," said Merrill Lynch
metals strategist Daniel Hynes.
The dollar also weakened in the wake of the Iran news,
although it later recovered some of those losses as traders said
the currency's reaction had been overdone. []
The U.S. currency was trading slightly softer on the day by
1000 GMT. A lower dollar tends to benefit the precious metal,
which is often bought as a hedge against currency weakness and
so moves in the opposite direction to the greenback.
Traders are awaiting further moves in oil resulting from
U.S. stockpile data due at 1430 GMT, which may give fresh
direction to gold.
The precious metal has had a poor start to the week, trading
more than 2 percent lower at its weakest point as the dollar has
ticked up and oil prices have dropped.
However, fears over inflation and financial market
instability are supporting gold.
"The metal is under pressure from the recent firming in the
U.S. dollar and crude's two-day decline, but supported by
concerns about financial market weakness, inflation and the
ongoing effects of the credit crunch," said UBS analyst John
Reade in a note.
"With the market pretty long, we favour the downside,
although any rebound in EUR/USD or crude oil could see the metal
gain further ground," he added.
Among other precious metals, spot platinum <XPT=> firmed to
$1,958.50/1,978.50 an ounce from $1,940.50/1,960.00 late in New
York. It hit a two-month low of $1,936.50 on Tuesday on fears a
slowing U.S. economy could weaken demand from car makers.
Spot palladium <XPD=> was little changed at $439.00/447.00
against $437.50/445.50 on Tuesday.
"(Palladium) price movements correlate to platinum, although
long term fundamentals are substantially weaker," noted Marc
Elliott, an analyst at investment bank Fairfax.
Spot silver <XAG=> was steady at $17.84/17.91 from
$17.82/17.88.
(Reporting by Jan Harvey; editing by Christopher Johnson)
