By Jan Harvey
LONDON (Reuters) - Gold rose toward $1,065 an ounce in Europe on Tuesday as persistent weakness in the dollar fueled buying of the precious metals as an alternative asset.
Platinum and palladium reached their highest in more than a year, buoyed by gold and supply concerns.
Spot gold was bid at $1,063.70 an ounce at 7:01 a.m. EDT (1101 GMT) against $1,062.70 late in New York on Monday. U.S. gold futures for December delivery on the COMEX division of the New York Mercantile Exchange rose $6.70 to $1,064.80 an ounce.
Standard Bank analyst Walter de Wet said given the dearth of physical demand for bullion, gold was primarily driven by the dollar, which in turn was in thrall to sentiment on the equity markets as earnings season advances.
"(The rise of gold) is a dollar story at this stage, because in terms of real physical demand, there is not much," he said.
"We are waiting for a whole bunch of earnings reports to come into the market, and if the past week's reports are anything to go by, these ones will also be positive," he added.
"If you see equities rising and U.S. Treasuries being sold, dollars will also be sold, which will make the dollar weaker."
World stocks <.MIWD00000PUS> hit a new 12-month high on Tuesday, fueled by optimism over corporate earnings and the global recovery after strong results from U.S. heavyweights Apple
The dollar is under pressure from rising risk appetite -- which benefits higher-yielding currencies -- expectations low U.S. interest rates will be sustained and questions about its status as the global reserve currency.
The U.S. unit slid to fresh 14-month lows against the euro, with the single currency rising close to $1.50.
"Even though speculative interest in gold futures and options is at record highs and global ETF holdings are swollen, we could see even more spec money entering the market (if) the greenback tumbles," said VTB Capital analyst Andrey Kryuchenkov.
TECHNICAL SUPPORT
Gold is technically well placed to build on the 6 percent rally it has posted in the last month, analysts who study charts of past price movements said.
"Gold is now in its third week of trying to break through its $1,059/71 resistance area," Commerzbank said in a note.
"Referring to the daily chart, we can see that the market remains bid though and that the above resistance area is now likely to be breached," they added. "The next minor upside target is seen at $1,079/1,082."
There was little reported gold buying by bullion-backed exchange-traded funds -- a major driver of prices in the first quarter of 2009 -- with holdings of the largest, the SPDR Gold Trust, unchanged for an eighth day on Monday.
Jewelry buying in India, the world's biggest gold consumer last year, was also lackluster as festival season ended.
Spot silver was at $17.73 an ounce against $17.78.
Platinum and palladium both rose to their highest in more than a year, with platinum hitting a 13-month high of $1,368 an ounce and palladium reaching a peak of $334.50, its firmest since August 2008.
Spot platinum was later at $1,361 an ounce against $1,355.50, while palladium was at $334 against $332.
Both metals benefited from strong underlying fundamentals, with concern persisting over the outlook for South African supply as the strong rand boosts producers' relative costs, and Russian palladium supply still lackluster.
Palladium demand is also picking up in China, analysts said.
(Editing by Sue Thomas)
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