LONDON, Oct 28: Gold climbed more than 3 per cent in Europe on Tuesday as the dollar softened against the euro and a recovery in equities curbed selling of bullion to cover losses on other markets.

Platinum also rallied, cheered by the recovery in gold prices, rising more than 6 percent to a session high of $821.50.

Spot gold rose to a session high of $755.00, before slipping back to $743.75/745.75 at 1041 GMT. Late in New York on Monday it was quoted at $729.60 an ounce.

There was no reason to liquidate gold except for deleveraging, because it is still a safe haven. We expect the Fed and the European Central Bank to cut rates over the coming months, and that will put real interest rates into more negative territory.

There is a very positive environment behind the gold price. The dollar slipped almost 1 per cent against the euro after earlier hitting a 2-1/2 year high versus the single currency.

Traders are eyeing the two-day rate-setting meeting of the US Federal Open Market Committee, which is expected to deliver a decision on Wednesday.

The Fed is expected to cut lending rates by half a percentage point to 1 per cent, the lowest since June 2004, in a bid to calm turmoil in the financial markets.

With interest rate futures pricing in a 66 per cent probability of a 50 basis point Fed rate cut, the greenback’s movements today will hog the limelight.

Oil prices also ticked higher, rising by $1 in Asian trade, tracking a rebound in stock markets. Firmer crude prices typically support gold, which is often bought as a hedge against oil-led inflation.

Platinum rebounded, climbing by 6 per cent to its session high of $821.50, as the softer dollar boosted interest in the precious metal.

The metal has been pressured to multi-year lows amid fears over falling demand from carmakers, who account for around 50pc of annual platinum consumption.

Major platinum producer Aquarius Platinum said in its first-quarter earnings report it has closed a shaft of its Marikana mine for care and maintenance against a backdrop of falling prices.

Spot platinum was quoted at $793.50/813.50 an ounce, up from $772.50 in late New York trade on Monday. Palladium climbed more than 4pc to a session high of $175 an ounce before settling to $170/180 an ounce from $167.50.

Spot silver dipped to $8.88/8.98 an ounce from $9.01.

—Reuters