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PRECIOUS-Gold gains on softer dollar, views on Fed rate outlook

Published 07/10/2015, 05:51 am
© Reuters.  PRECIOUS-Gold gains on softer dollar, views on Fed rate outlook
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* Gold benefits from Russia-Turkey tensions

* Silver hits fresh three-month high

* Palladium at highest since June (Adds comment, byline, NEW YORK to dateline; updates prices)

By Marcy Nicholson and Clara Denina

NEW YORK/LONDON, Oct 6 (Reuters) - Gold rose to its highest in nearly two weeks on Tuesday as the dollar fell in the wake of disappointing U.S. economic data that raised doubts over a Federal Reserve interest rate rise this year, while platinum rallied 3 percent.

Spot gold XAU= rose 1.4 percent to $1,151.20 an ounce, the highest since Sept. 24, and was up 1 percent at $1,147.01 an ounce by 2:44 p.m. EDT (1844 GMT). U.S. gold futures for December delivery GCZ5 settled up 0.8 percent at $1,146.40 an ounce.

The gains added to Friday's 2.2 percent jump, the biggest one-day rise since Jan. 15, which followed data showing U.S. employers had slammed the brakes on hiring over the last two months. ID:nLNN2LEBGC

Then on Monday, data showed the pace of growth in the U.S. services sector decelerated in September, though some analysts said a U.S. rate hike in December could not be ruled out entirely. ID:nN9N118014

"The Fed is worried about the implications of continuing low inflation or even outright deflation because of low oil prices, but a December rate hike is still possible," Mitsubishi Corp strategist Jonathan Butler said.

Analysts also cited increasing international political tensions after Russia's warplanes violated the air space of alliance member Turkey at the weekend. ID:nL8N12624U

"Increasing tensions between Russia and Turkey are helping gold today ... That should continue in the short term, but then the focus will be shifting back to what the Fed is going to do and the dollar," Commerzbank (XETRA:CBKG) analyst Daniel Briesemann said.

The dollar .DXY was down 0.7 percent against a basket of currencies and global shares rose. MKTS/GLOB

Platinum XPT= rose 3.1 percent to $940.25 an ounce, having hit a near seven-year low of $888 on Friday, offering industrial buyers a relatively good price, said James Steel, chief metals analyst for HSBC Securities in New York.

"Its ability to get over $900 has led there to be some modest revaluation of auto diesel demand going forward and may not be as dire as the knee-jerk reaction to the auto diesel issue," Steel said.

SPDR Gold Trust GLD , the top gold-backed exchange-traded fund, saw its first outflow in two weeks on Monday. GOL/ETF

Silver XAG= rose to the highest in more than three months at $16.08 an ounce, extending gains above its 200-day moving average. It has gained nearly 10 percent since Thursday's close.

Palladium XPD= reached its highest since June at $712.50 an ounce as it continued to benefit from expectations that demand for gasoline cars, where the metal is used in catalysts, would rise due to the Volkswagen (XETRA:VOWG) diesel engine emissions scandal.

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