Gold rises above $1,060 on weak U.S. dollar

A woman buyer looks at gold bangles at a jewellery shop in Mumbai October 8, 2009.

SYDNEY (Reuters) - Gold surged past $1,060 an ounce on Tuesday and headed back toward last week's record highs, boosted by a falling U.S. dollar.

The dollar sank to near 14-month lows after currency investors bet the Federal Reserve would hold U.S. interest rates near zero well into 2010. Gold is regarded as a hedge against the weakening value of paper assets due to currency depreciation.

A nationwide strike by miners in Peru, the world's sixth largest gold producer, also improved buying sentiment.

Spot gold stood at $1,064.55/$1,066.55 an ounce at 2200 GMT against $1,060.70 in late New York trade on Monday.

Near-term resistance is seen around $1,068, a level it tested before breaking through to a record high of $1.070.40 on October 14. Support is seen at $1,055.43, the 10-day moving average.

U.S. December gold futures were up $6.90 or 0.65 percent at $1,065 an ounce in the COMEX division of the New York Mercantile Exchange.

(Reporting by Bruce Hextall; Editing by Mark Bendeich)