* Dollar weakens, equities climb after home price index data
* Palladium hits 11-1/2 month high
(Updates prices, adds comment)
By Jan Harvey
LONDON, Aug 25 (Reuters) - Gold extended gains on Tuesday as
the dollar weakened against a basket of currencies, boosting
interest in the precious metal as an alternative asset.
Spot gold <XAU=> was bid at $948.00 an ounce at 1440 GMT,
against $941.40 an ounce 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 $5.70 to $949.40 an ounce.
The precious metal climbed as the dollar slipped against a
basket of six major currencies after data showed prices of U.S.
single family homes rose for a second consecutive month in June
and consumer confidence rose more than expected in August.
"Gold was swept down rather brutally yesterday afternoon for
no good reason, and it has picked up quite nicely this afternoon
on the back of the turnaround in the dollar," said Mitsubishi
Corp precious metals strategist Tom Kendall.
The dollar was also knocked by a recovery in equity markets,
as Ben Bernanke's reappointment as Federal Reserve chairman was
seen as likely to encourage investors to take on riskier trades.
[]
A weaker dollar often lifts gold, which can be bought as an
alternative to the unit.
European shares extended gains after the U.S. data, while
Wall Street stocks rose in early trade, with the S&P 500 <.SPX>
hitting a ten-month intraday high. [] []
A retreat in risk appetite early in the day weighed on
nominally riskier assets such as equities and industrial
commodities. Its recovery allowed oil prices to steady. []
JEWELLERS ON SIDELINES
Demand for the precious metal was relatively soft, with
jewellers in India, the world's largest bullion buyer, keeping
to the sidelines in anticipation of further price falls.
"Traders don't want to fill in orders at prices near 15,000
(rupees)," one Mumbai-based gold-dealer said.
Holdings of the world's largest gold-backed exchange-traded
fund, the SPDR Gold Trust <GLD>, were steady after inching up on
Friday. []
Among other precious metals, palladium prices rose to their
highest level in nearly a year as hopes for an improvement in
the balance of supply and demand and gains in gold boosted
interest in the autocatalyst material.
"People are looking at ways to leverage off the expected
turnaround in the auto industry," said Kendall. "As sales pick
up, they are looking for palladium to be the chief beneficiary,
as opposed to platinum, with the substitution story continuing."
Spot palladium <XPD=> was at $285.75 an ounce against
$279.50, having earlier touched a high of $287.25, its firmest
since early September last year.
South Africa's biggest union said on Tuesday a ballot of
workers at platinum producer Impala Platinum <IMPJ.J> showed a
split over whether to accept an improved wage offer to avert a
strike. []
Some members are already on strike at the company's biggest
mine over the wage dispute, the union said. South Africa
produces four-fifths of the world's platinum. []
"If Impala and the NUM come to terms on a new contract, some
risk premium in the market may be removed and platinum prices
could fall further," HSBC analyst Jim Steel said in a note.
Platinum <XPT=> rose to $1,233.50 from $1,236.50 an ounce,
while silver <XAG=> was at $14.28 an ounce against $14.13.
(Editing by Keiron Henderson)
