NEW YORK/LONDON (Reuters) - Gold ended firmer in quiet trade on Monday as crude oil's sharp gains bolstered bullion's status as a hedge against inflation, offsetting a dollar rally.
Gold's future direction will depend on global market conditions and fund activity as a choppy stock market could still trigger a bout of long liquidation, increasing price volatility of the metal, traders said.
Spot gold was at $792.80 an ounce at 2:00 p.m. EDT, up 1.5 percent from Friday's close of $781.50.
U.S. gold contract for December delivery settled up $2.30 at $790.00 an ounce on the COMEX division of the New York Mercantile Exchange.
Traders are keeping a sharp eye on U.S. crude oil prices, which ended up $2.40 at $74.25 a barrel on Monday ahead of a meeting of the OPEC cartel on production quotas later in the week.
"It looks as if (the markets) are factoring in a cut, which should help gold in the very short term," said Calyon analyst Robin Bhar.
Firmer oil prices boost interest in commodities as an asset class.
Bullion posted gains despite the dollar's rise based on an improvement in risk appetite.
A firmer dollar generally pressures gold, which is often bought as an alternative investment to the U.S. currency.
Gold prices fell nearly 8 percent last week as investors sold the precious metal to cover margin calls amid stock losses.
"Margin calls can hit at any time, and the brokers can become overly aggressive on demanding fund, and that is creating a lot of volatility," said FC Stone broker George Nickas.
Andy Montano, a director of bullion dealer ScotiaMocatta said that physical gold demand was strong ahead of the Hindu festival of Diwali, but that alone might not be enough to lift gold.
"Certainly, what the funds and large investors choose to do with (gold) can have an overwhelming impact," Montano said.
Premiums for gold bars tripled in Asia to their highest this year, as jewellers bought the metal after prices dropped to a one-month low.
Platinum rose nearly $70 on Monday to a high of $920, before giving up the majority of those gains to end at $881.50, up 3.6 percent from Friday's late quote of $850.50
The metal primarily used in catalytic converters tumbled last week on fears of falling demand from carmakers. Analysts say it may have further to fall despite the bounce higher.
On Monday UBS became the latest bank to cut its platinum price view, trimming its one- and three-month forecasts to $950 an ounce from $1,300 and $1,400 respectively.
Palladium also bounced, rising nearly 7 percent to a session high of $181, and was last at $174.50, up 3 percent from Friday's close of $169.50.
Elsewhere, silver was at $9.74, up 4 percent from Friday's finish of $9.37, after rising as much as 6 percent to $9.95, tracking gold's rally.
Editing by Christian Wiessner