Gold up on softer dollar; platinum and palladium at multi-year lows

By Clara Denina

LONDON (Reuters) - Gold rose on Tuesday as the dollar weakened after soft U.S. economic data, while platinum and palladium hit multi-year lows on oversupply and sluggish autocatalysts demand.

Platinum dipped to its lowest since January 2009 at $940.50 an ounce, while palladium hit a near three-year low of $586.30 an ounce.

"Miners continue to increase production in a market that is already oversupplied and only significant cuts would help platinum and palladium prices recover," Bank of America-Merrill Lynch analyst Michael Widmer said.

Both metals, mainly used in catalysts to clean up vehicle exhaust emissions, were further pressured by a private survey on Monday that showed China's factory activity shrank more than initially estimated in July.

"Industrial metals were hit hard in the wake of yesterday's poor Chinese manufacturing data and headlines that the Chinese auto industry is facing significant headwinds," MKS PAMP said in a note.

The metals have also suffered from a sharp drop in gold prices, which they tend to track, over the past month on the back of a rising dollar and expectations for an increase in U.S. interest rates.

Spot gold was up 0.5 percent at $1,091.33 an ounce by 1143 GMT, but still not far above the $1,077 it hit on July 24, its weakest level since February 2010.

U.S. gold for December delivery was up 0.1 percent at $1,090.50 an ounce.

A softer dollar helped relieve the pressure on gold. It was down 0.2 percent against a basket of currencies, pegged back by U.S. factory activity and consumer spending data on Monday that suggested the world's largest economy may have lost some momentum in the past two months.

Despite weaker data, economists believe the U.S. central bank could still be on course to lift rates this year. The next main macro economic event is the release of U.S. nonfarm payrolls data on Friday. [ECONUS]

An improving labour market could strengthen the dollar further, indicating more price losses for non-interest bearing gold. The metal lost nearly 7 percent in July, when investors sharply cut their exposure to bullion.

"In the run-up to the first Fed rate hike it is going to be difficult for gold to rally ... gold has been in a four-year bear market already and we can't see any sustained driver that would take prices higher," Widmer said.

Spot silver was up 0.2 percent to $14.50 an ounce.

The 19-commodity Thomson Reuters/Core Commodity CRB Index <.TRJCRB>, a global price benchmark, sank to a 12-year low on Monday as fears about a hard economic landing in China and a global glut deepened. [COM/WRAP]

(Additional reporting by Manolo Serapio Jr in Manila; Editing by Pravin Char and Jason Neely)