Gold jumps 2 percent on oil

By Lewa Pardomuan

SINGAPORE (Reuters) - Gold gained more than 2 percent on Tuesday on high oil prices and a firmer euro, recovering from its biggest two-day decline since early 1983, but a rally in stock markets could cap gains.

Not to be outdone, platinum surged 6 percent to a two-week high above $1,000 an ounce, with Tokyo futures rising sharply after traders there returned from a long weekend.

Gold was at $844.20 an ounce, up $13.40 from the New York notional close, having hit an intraday high of $850.00 an ounce. It had dropped to $821 on Monday, its weakest since October 3.

"Actually, we are seeing gold demand for both physical gold and platinum. I guess platinum is more impressive. We've been quite busy selling platinum for investment since we reopened today," said a dealer at a trading house in Tokyo.

"There's gold buying from retail investors but I must say it's not that much because many people concentrate on the rebounding stock markets," he said.

Gold, which struck a record at $1,030.80 in March, traded around $800 in September. It hit a two-month high of $931 on Friday on a weak dollar before tumbling to $823.50 as investors sought cash to cover margin calls from losses in equities.

"The dollar is much lower today and I guess it's still on a bit of a spillover weakness from yesterday," said Adriah Koh, analyst at Phillip Futures in Singapore.

"In the near term, gold's support will probably come in around the $820 region and a break below these levels could bring us to the $800s and possibly the $780 supports," he said.

Oil rose above $83 a barrel after a concerted effort by governments to shore up the banking sector gave hope the current financial crisis may ease.

The Nikkei average .N225 rallied more than 14 percent on Tuesday, the biggest one-day gain in its 58-year history, which in theory reduced gold's appeal as an alternative investment. .T. The euro rose around 0.5 percent to $1.3664.

In addition to getting support from firm gold and heavy buying from Japanese speculators after a weekend holiday, hopes for an easing of the credit crisis and reduced fears of recession pushed up platinum to its strongest in two weeks at $1,040.

By 2:06 a.m. EDT platinum was at $1,022.00 ounce, up $43.50 from New York's notional close. The metal was well still below a record high of $2,290 struck in March, hit by heavy selling on fears of falling demand for autocatalysts, which account for more than 60 percent of global demand.

"I think it really pans down to how the economy is going to do. That will in turn affect the auto industry and affect sentiments on platinum," said Koh of Phillip Futures.

New York gold futures rose $6.0 an ounce to $848.5 an ounce on safe-haven buying.

Precious metals prices at 2:06 a.m. EDT

Metal Last Change Pct chg YTD pct chg Turnover

Spot Gold 844.20 13.40 +1.61 1.38

Spot Silver 10.95 0.30 +2.82 -25.86

Spot Platinum 1022.00 43.50 +4.45 -32.76

Spot Palladium 201.00 4.50 +2.29 -45.38

TOCOM Gold 2770.00 -140.00 -4.81 -9.48 42055

TOCOM Platinum 3392.00 162.00 +5.02 -36.47 15301

TOCOM Silver 360.00 -7.20 -1.96 -33.46 1292

TOCOM Palladium 685.00 44.00 +6.86 -49.30 757

Euro/Dollar 1.3683

Dollar/Yen 102.39

TOCOM prices in yen per gram, except TOCOM silver which is priced in yen per 10 grams. Spot prices in $ per ounce.

(Editing by Clarence Fernandez)