Array

SYDNEY, Sep 18 (Reuters) Gold prices took a sharp climb up after last week's hefty sell-off, rising by almost $5 an ounce despite a firmer U.S. dollar that typically sparks selling across Asia and a benign outlook for U.S. inflation.

Silver rose more than 2 percent, buoyed by gold's advance, though platnum and palladium faced modest downside pressures.

Spot gold cost $582.70/584.20 an ounce at 0556 GMT versus $578.30 in New York on Friday, when the metal had tumbled as low as $571.20, the cheapest price paid since June 20.

''We're seeing gold show some resilience against market forces,'' a bullion dealer said.

Gold opened at $580.60/581.75 an ounce in Sydney before staging a steady climb.

Gold, out of a favour last week compared with equities, found support among investors who valued the metal as cheap in the wake of widespread sell-downs by commodities funds and other big position holders, dealers said.

''For the right investor, gold at $580 is the right price,'' one said.

Gold has lost around 20 percent of its value since hitting a 26-year high of $730 in mid-May, when investors poured money into the market as a hedge against mideast tensions and inflationary concerns linked to rising oil prices.

On Sept. 11, gold plunged to under $600 for the first time in more than two months, owing to falling energy prices and a weak technical outlook.

Gold rose on Monday despite the weight of mounting negative factors, namely a stronger dollar and little concern that inflation will take hold soon.

The dollar climbed to near five-month highs against the yen as the market brushed aside calls from some in the Group of Seven countries that the Japanese currency should appreciate.

Also, inflationary signs have eased, with data Friday showing a modest 0.2 per cent increase in U.S. consumer prices, taking the pressure off the Federal Reserve to lift interest rates again.

On the upside, crude oil rose to $63.46 a barrel , up from a near six-month low of $62.03 plumbed on Friday, helping bullion gather traction.

On the Tokyo Commodity Exchange, the most active August 2007 contract fell 52 yen per gram to 2,201 yen ($18.81).

Spot silver gained 26 cents to $10.95/11.02 an ounce.

Silver on Friday fell to its lowest level since July 19 to $10.42 an ounce at one stage.

Spot palladium was down $1 at $307/314.00 from $308/313.

Spot platinum was $3 lower at $1,154/1,162 an ounce.

Last Net Change Pct Move Gold 582.70 3.60 +0.62 TOCOM Gold 2180.00 0.00 +0.00 Platinum 1154.00 -3.00 -0.26 Palladium 307.00 -1.00 -0.32 Silver 10.92 0.11 +1.02 Change so far in 2006 Metal Latest bid End prev year Pct Move Gold 582.70 517.20 +12.66 TOCOM Gold 2180.00 1973.00 +10.49 Platinum 1154.00 968.00 +19.21 Palladium 307.00 254.00 +20.87 Silver 10.92 8.81 +23.95 ($1=117.02 yen) REUTERS KR SSC1203