LONDON, Oct 13: Gold rose in Europe on Monday as the dollar weakened, boosting the precious metal’s appeal as an alternative investment, and as oil prices climbed.

Commodities recovered almost across the board after Friday’s market rout, with crude futures, industrial metals, sugar, grains and coffee all rising.

Spot gold was at $862.25/865.25 an ounce up from $847.40 in late New York trade on Friday. The metal swung in a range of more than $100 that session as turmoil on the financial markets spooked investors.

Gold at this level is attractive, and we are looking for igher prices towards $900, said Commerzbank analyst Eugen Weinberg.

Gold was supported by a slip in the dollar versus the euro, usually a key external driver of bullion prices. The euro rallied broadly after European governments said they would work together to stabilise the banking sector.

European governments agreed to provide capital for banks short of funds due to frozen money markets at an emergency meeting in Paris over the weekend.

If stock markets calm down and the fear index declines, then gold is likely to follow again the usual fundamental drivers, said Dresdner Kleinwort in a note.

Crude futures supported gold on Monday, rising more than $3 after Friday’s more than 10 per cent dive.

Traders will also be eyeing investment interest in gold exchange-traded funds. The world’s largest gold-backed ETF, the SPDR Gold Trust, said its holdings rose to a record 770.64 tons on Friday.

Silver climbed more than 5 per cent to a session high of $10.81 an ounce, up from $10.14 in late New York trade on Friday. Later it was trading at $10.79/10.87.

More settled financial markets were expected to support the industrial precious metals -- including silver, platinum and palladium -- much more than gold.

Analysts were hoping a more settled outlook to the financial markets would underpin demand for industrial metals.

Platinum and palladium should benefit from confidence coming back into the industrial metals,” said Weinberg.

Palladium also climbed nearly 5 per cent to a high of $197 an ounce, before settling back to trade at $196/201 an ounce against $188.

Platinum languished, however, on fears demand from carmakers will be lacklustre this year and into next year. Spot platinum was at $968/998 an ounce against $980.50.—Reuters