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COMEX gold renews climb on early dollar tumble

NEW YORK, Sept 30 (Reuters) - A slumping dollar brought overseas investors marching back into gold early Tuesday, after a one-day retreat from last week's 7-year highs restored confidence in the market.

The greenback fell to its lowest in almost 3 years against the yen and a 3-month low on the euro Tuesday, making bullion more affordable overseas and raising its profile as an alternative currency amid uncertainty about the U.S. economic recovery and company profits.

"It's definitely euro related. But I think this market had failed in its downside attempt yesterday, so a lot of opinions are beginning to shift," said a floor broker. "Where everybody was bearish yesterday and the market ran up, now people are cautiously bullish."

At 0925 EDT, COMEX December gold was up $3.20 at $386.40 an ounce, trading from $382.80 to $387.10. The contract hit $394.80 on Thursday before fund liquidation knocked it down to the $380 psychological support area.

It has now recovered about half of that drop, with dealers watching resistance around $387.50, the 50-percent retracement mark.

Bullion hit its highest price since May 1996 at $393.30 last week. Dealers were quoting spot gold at $384.80/5.50 early Tuesday, up from $381.90/2.60 late Monday. The London morning fix was $384.50.

Funds were looking to mark their gold positions to market at September's end at the best possible rates.

"Today is end of quarter and I would expect to see some book squaring by longs as well as shorts," said Donald Tierney at Pell Brothers Futures.

The euro rose to $1.1694, its highest since June 20, while dollar/yen fell to 110.22, a 33-month low.

"Financial concerns remain the chief driver in the market while currency movements (which of course are not unrelated to financial worries) are helping to dictate short term moves," wrote Rhona O'Connell, market research director at the World Gold Council.

December silver was up 8.5 cents at $5.16 an ounce, in a $5.08 to $5.175 range. It remains well below Thursday's 3-year high of $5.395. Spot silver fetched $5.13/15, up from $5.05/07 at the close. The London fix was at $5.115.

NYMEX January platinum was $4.80 higher at $700.50 an ounce. Spot platinum was quoted at $707.00/712.00.

December palladium was up $4.40 at $213.00 an ounce. Spot palladium was indicated at $207.00/212.00.