LONDON (Reuters) - Gold rose to 6-1/2 week highs at $1,141.70 an ounce on Wednesday as the dollar extended losses versus the euro, and as broader fears over the outlook for paper currencies lent further support to the precious metal.
Spot gold was bid at $1,138.25 an ounce at 1241 GMT, against $1,134.50 late in New York on Tuesday. U.S. gold futures for April delivery on the COMEX division of the New York Mercantile Exchange rose $1.40 to $1,139.10 an ounce.
The metal held near the record highs it hit on Tuesday in euros and sterling terms, boosted by volatility in the foreign exchange markets.
"Gold is being used as a bit of an alternative to currencies," said Citigroup analyst David Thurtell. "It takes you out of dollar or euro exposure and puts you into a non-currency."
Gold is also benefiting from weakness in the dollar as it boosts gold's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.
The euro extended gains against the U.S. unit on Wednesday to hit the day's high as a Greek government source cited details of fresh plans to tackle Greece's debt problems.
The Greek government endorsed a 4.8 billion euro austerity package, but markets were wary over whether it would be enough for Athens to win financial support from its European partners.
Concern over the fiscal health of peripheral euro zone economies like Greece, Italy and Spain have weighed heavily on the euro this year. It is currently down nearly 5 percent versus the dollar in 2010.
"The euro is oversold at the moment, but there is no guarantee that it does not have more downside especially given a quickly improving U.S. macro-economic environment," said VTB Capital analyst Andrey Kryuchenkov.
DAYA EYED
Traders are awaiting ADP U.S. employment data due later in the day, which is seen as a key precursor to Friday's closely-watched non-farm payrolls data for February.
"Markets will look to Wednesday's key ADP Employment Change survey data as well as the market-moving ISM Services report (at 1500 GMT)," said Richcomm Global Services senior analyst Pradeep Unni. "The U.S. non-farm payrolls report on Friday (will) be key data."
Among other commodities, oil climbed above $80 a barrel on Wednesday as the dollar weakened and investors looked ahead to a U.S. energy inventory report due later.
Elsewhere silver was bid at $17.11 an ounce against $16.92, having earlier touched a five-week high of $17.17.
The world's largest silver-backed exchange-traded fund, the iShares Silver Trust, said its holdings fell 3.46 tons from the previous day to 9,473.45 tons as of March 2.
Platinum was at $1,576 an ounce against $1,566.50, while palladium was at $442 against $439.
U.S. auto sales stalled in February as a safety crisis sent Toyota Motor Corp (7203.T) (TM.N) reeling, allowing Ford Motor Co (F.N) to leap into the industry's top spot for the first time since 1998.
Both platinum and palladium are heavily exposed to the automotive sector, as they are primarily used in the production of autocatalysts.
(Reporting by Jan Harvey; Editing by Keiron Henderson)
