LONDON, Sept 8: Gold jumped 2 per cent on Monday before a rising dollar capped further advances, but a firm oil price supported precious metals.

Analysts digested the impact on commodities from a US bailout of two top mortgage lenders, which may encourage investors to return to riskier assets.

The dollar is at the fore ... if we see the dollar break below $1.42 to the euro then gold will go swiftly under $800 an ounce again, said analyst Tom Kendall at Mitsubishi.

Spot gold extended gains into a second session to stand at $804.70 per ounce per cent from $801.10 in late New York trade on Friday. Earlier it hit a high of $817.40 -- up 2 per cent before the dollar turned up.

Gold hit a year-to-date low of $773.90 on Aug. 15.

Earlier in the session gold was buoyed by the euro’s gains against the dollar, rising to around $1.4430, off an 11-month low of $1.4197 touched last week.

Crude oil gained $1 to around $107 a barrel, rebounding from a five-month low on worries that Hurricane Ike would tear through the Gulf of Mexico.

The dependence on the oil price is most likely not going to disappear in the next couple of days, said a Heraeus Metallhandelsgesellschaft report.

Gold generally is seen as a hedge against oil-led inflation and often moves in the opposite direction of the dollar as it becomes cheaper for investors holding other currencies.

Analysts said gold’s bounce on Monday appeared more likely to be cautionary short-covering after a tumble from nearly $1,000 an ounce in mid-July, with some uncertainty still lingering.

The outlook for gold remained bearish, but it could gather safe-haven appeal with the outlook for the US currency and the economy unclear, traders said.

Silver was firmer at $12.26/12.32 against $12.19/12.27 in New York on Friday.

Silver has been oversold relative to gold and that is giving it a touch of support ... otherwise the market is mostly taking its direction from gold, Kendall said.

Platinum strengthened to $1,357.50/1,377.50, up from Friday’s last quote of $1,353.00/1,373.00.

Platinum looks relatively cheap between $1,300 and $1,400 an ounce, said the Heraeus report.

We wouldn’t rule out that the metal remains now in a trading range between $1,275 and $1,525.—Reuters