Gold rises above $1,060 on gains in euro, oil

By Frank Tang and Jan Harvey

NEW YORK/LONDON (Reuters) - Gold prices clawed back above $1,060 an ounce Wednesday as oil rallied and the euro rose above $1.50 for the first time in 14 months.

The metal continued to take heart from a steadily falling dollar. Investors were turning to gold as the depreciation of global currencies threatened the value of paper assets.

Weak physical demand among jewelers and exchange-traded funds has put gold at the mercy of the currency markets, traders said.

Spot gold was at $1,062.70 an ounce at 3:07 p.m. EDT compared with $1,054.00 late Tuesday in New York.

U.S. December gold futures settled up $4.80 at $1,063.40 an ounce on the COMEX division of the New York Mercantile Exchange.

Prices have been tracking the euro-dollar exchange rate, with gold reaching record highs of $1,070.40 last week as the dollar hit its lowest level in over a year versus the single currency.

"Gold does not seem to have a mind of its own," said Afshin Nabavi, head of trading at MKS Finance in Geneva. "It all depends on the euro."

The dollar touched a one-month low against sterling and the euro broke above $1.50 as expectations for low U.S. interest rates weighed on the greenback.