Gold rises on bargain buying,platinum off 1-mth low

By Lewa Pardomuan

SINGAPORE (Reuters) - Gold regained strength on Tuesday as bargain hunters resurfaced after the price dropped to its lowest level in more than a week, but steadier oil could cap gains.

Silver edged down, palladium firmed while platinum rebounded after falling to a 1-month low on Monday on fears a slowing U.S. economy may weaken demand for the metal used in auto catalysts.

Gold rose to $926.90/927.70 an ounce from $925.15/926.35 an ounce late in New York. Gold fell as low as $914.50 an ounce on Monday, its lowest level since June 27, amid declines in commodities such as oil and grains.

Investors focused on the three-day annual summit of the Group of Eight Industrialised nations in Japan, where G8 leaders said the world economy faces uncertainty and downside risks, including that posed by a sharp rise in oil.

"It seems like all the eyes are on the G8 announcement whether they will be dealing with oil or the value of the dollar," said Peter Tse, a dealer at Scotia Mocatta in Hong Kong.

"If so, if there's anything happening in oil and the dollar, that would obviously affect the precious metals market," he said.

Oil rose $1.02 to $142.39 a barrel, having fallen nearly 3 percent on Monday amid signals Iran would be more flexible in negotiations over its nuclear programme.

"The situation in Iran is not yet resolved. We have to see how the U.S. will react," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.