Gold rises as oil firms

By Lewa Pardomuan

SINGAPORE (Reuters) - Gold extended gains on Wednesday as fears of rising inflation, tensions between Russia and the West and a rebounding euro spurred speculative buying.

Platinum rose as much as 1.8 percent to track gold but gains may be limited with automakers still on the sidelines. Palladium and silver also firmed.

Gold rose to $826.70/827.70 an ounce from $822.90/824.30 an ounce late in New York on Tuesday, when it gained more than $2 an ounce.

"Gold is still consolidating for the time being. But it seems the market is still a little bit worried about the global economy," said Dick Poon, manager precious metals at Heraeus Ltd in Hong Kong.

Gold has bounced nearly 7 percent since tumbling to a nine-month low around $773 in mid-August, but the metal is well below a record high of $1,030.80 struck in March. Analysts said chart-based support will hold prices above $800 an ounce.

"Private investors have gradually shown interest in gold, and the oil price has also reached its bottom. Within this week, it's possible for gold to reach $835 or $840," said Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo.

Oil edged up around $117 a barrel on concerns a tropical storm could disrupt U.S. oil and natural gas production in the Gulf of Mexico and on escalating tensions between the West and Russia over Georgia.

The euro firmed to $1.4700 on short covering, pulling away from a six-month low of $1.4570 hit on trading platform EBS on Tuesday.

In the physical market, jewelers in India, the world's largest consumer of gold, paid a premium to secure scarce supplies of the metal to meet surging demand ahead of the busy marriage season.

"Gold near $800 remains vulnerable in the near term to a stronger dollar," said Jeffrey Nichols, managing director of American Precious Metals Advisors.

"But it is underpinned by rising physical demand in key global markets, deteriorating macroeconomic and financial environments, accelerating inflation, and tight supply/demand fundamentals," he said.

The new benchmark contract on the Tokyo Commodity Exchange, August 2009, was at 2,925 yen per gram after opening at 2,926 yen.

Spot platinum rose to $1,422.50/1,442.00 an ounce from $1,409.50/1,429.50 late in New York as bargain buying persisted after the metal sank to an 11-month low around $1,296 last week.

"Automakers haven't entered the market yet. They will wait and see," said Sonoda of Daiichi Commodities, who pegged support around $1,400 an ounce.

The bulk of the world's platinum is used by automakers in autocatalyst systems that scrub exhaust fumes of dangerous and environmentally damaging chemicals. Platinum prices are well below a lifetime high of $2,290 hit in early March.

(Editing by Michael Urquhart)