Gold rises over 1% as dollar falls, oil gains

Carrying forward with its recent rally, gold for August delivery rose $12.50 to $940.80 an ounce on the New York Mercantile Exchange.

"Another weak opening for the dollar ... is leading to yet another round of buying in commodities," said Edward Meir, an analyst at MF Global, in a research note.

Mounting risk aversion and sliding equities in Europe and overnight in Asia left the dollar in a defensive posture in foreign-exchange trading. See Currencies.

In the energy pits, crude futures traded back above $142 a barrel, as weakness in the U.S. dollar and geopolitical jitters underpinned demand. See Futures Movers.

"With inflation still at the forefront of most central banks' concerns, investors are likely to favor those assets which offer anti-inflationary properties," said James Moore, analyst with TheBullionDesk.com, in a research note. Gold is typically seen as a good hedge against inflation.

On Monday, gold closed down $3 an ounce.

For the year to date, however, front-month gold futures climbed $90.30, or 10.8%, from $838 on Dec. 31, 2007.

Also on the Nymex Tuesday, September silver futures rose 45 cents to stand at $17.97 an ounce. July platinum futures gained $13.40 to $2,082.90 an ounce, September palladium added $4.20 to $468.95 an ounce and September copper tacked on 2 cents to $3.90 a pound.

Polya Lesova is a MarketWatch reporter based in New York.

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