LONDON, Aug 27: Gold prices rose in Europe on Wednesday, tracking gains in oil, as the dollar retreated from the six-month high it hit in the previous session.

Gold rose to $830.20/831.20 an ounce at 0840 GMT from $822.90/824.30 an ounce late in New York on Tuesday.

In the longer term global economic deterioration is expected to support the dollar, as the Federal Reserve is likely to hold rates while other key central banks are expected to cut.

This should keep a lid on gains in gold, analysts said.

Oil rose as fears grew tropical storm Gustav could affect US oil operations in the Gulf of Mexico.

Gold tends to track crude prices higher, as the precious metal can be bought as a hedge against oil-led inflation.

Traders will be closely eyeing key US oil stockpile data due for release at 1435 GMT for its effects on the crude market.

However, it is the dollar-euro exchange rate that is most likely to dictate trade on Wednesday, brokers said.

Although oil prices should remain supported by concerns over storm Gustav today, the greenback’s movement against the euro could take centre stage and set the tone for the commodity complex, said Standard Bank analyst Manqoba Madinane.

Precious metal prices could come under pressure today as investors watch for a correction to the upside for the greenback against the euro.

Spot platinum meanwhile climbed 1.5 per cent as traders took advantage of a recent drop in prices to buy into the white metal. Palladium also ticked up 2 per cent.

Both metals have suffered from fears weaker economic growth will cut car consumption, denting demand for the platinum group metals as components in catalytic converters.

But after a sharp drop in prices throughout early August, both metals are now bouncing back.

The white metal... has rallied towards $1,440 this morning following strong demand from Asian industrials, said TheBullionDesk.com analyst James Moore.

Spot platinum rose to $1,430.50/1,450.00 an ounce from $1,409.50/1,429.50 late in New York.

Spot palladium firmed to $287.00/295.00 an ounce from $282.00/290.00.—Reuters