Gold jumps 2 percent on surging oil

By Lewa Pardomuan

LONDON (Reuters) - Gold jumped more than 2 percent on Thursday as investor buying picked up while oil surged and the dollar weakened against the euro, boosting the metal's appeal as an alternative investment and as an inflation hedge.

Gold's gains pushed up other precious metals, with platinum rising more than 2 percent. Silver and palladium also advanced.

Spot gold hit a high of $887.50 an ounce, up from $865.05/866.25 an ounce in late New York on Wednesday when it touched a one-week low of $859.30 on a firmer U.S. dollar.

"The market seems to have ended it consolidation phase after sustaining above the $860 level," said Pradeep Unni, analyst at Vision Commodities Services in Dubai.

"Although further gains would be needed to erase the bearish tone, selling seems to have momentarily ended. As long as $860 holds, the bulls are safe."

But gold was still more than $100 away from a record high of $1,030.80 an ounce hit on March 17, and dealers expected jewelry makers to take advantage of lower prices to stock up again.

"This is a perfect opportunity for them to be restocking because the gold price could very easily get back above the $900 territory, and gold can do that in a very short space of time," said Nick Moore, metals analyst at ABN AMRO.

"I think the high gold price clearly had very significant impact on jewelry off-take. I think the direction, looking ahead, will be driven partly by what's happening with oil."