LONDON, Oct 7: Gold rose more than 3 per cent and silver was up by 5 per cent on Tuesday as European stock markets turned lower, sparking a flight to safety.

Rising oil prices and a softer dollar underpinned gains as commodities took on a firmer tone after recent losses.

Gold hit a record high in euro terms, according to Reuters data, at 654.22 euros an ounce, up from 635.29 late on Monday.

Spot gold rose to a session high of $887.30 before settling back to trade at $886.40/889.40 up from $857.45 an ounce in late New York trade on Monday.

Silver was at $11.65/11.75 an ounce, having earlier touched an intraday high of $11.59 an ounce. Late in New York on Monday it was quoted at $11.01 an ounce.

Gold responded by ticking higher. As the banking sector continues to fall from one crisis to the next and equities continue to sell off, there aren’t many places to put your money, said Mitsubishi precious metals strategist Tom Kendall.

Gold typically moves in the opposite direction to the dollar, as it is often bought as an alternative investment to the US currency.

Gold traders will be eyeing remarks from Federal Reserve chairman Ben Bernanke and a speech in Evian from European Central Bank chief Jean-Claude Trichet later in the session.

European Union finance ministers are also meeting in Luxembourg to discuss means of reducing market turbulence.

Support for gold prices from the rocky economic situation looks set to remain firm, analysts say, with prices potentially climbing further if the outlook worsens.

Physical demand for coins and bars is also strong, while jewellery buying is expected to increase going into the fourth quarter.

In the near term, we expect gold to be highly sensitive to macro developments, given the potential for safe-haven investment demand to ride on top of seasonal strength in physical/fabrication offtake, said Citi Investment Research analysts in a note.

Platinum and palladium prices also rose, with platinum climbing 4.5 per cent to return to the $1,000 an ounce level for the first time in three sessions.

Platinum was quoted at $998.50/1,018.50, up from $961.50 late in New York on Monday. Palladium was at 198.50/208.50 an ounce, up from $194.—Reuters