Gold climbed back above $1,500 an ounce on Monday and silver rallied more than 6 per cent as a retreating dollar and a rebound in oil prices helped precious metals recover some ground after last week's hefty losses.

Spot gold rose as high as $1,510.40 an ounce and was bid at $1,506.30 an ounce at 1123 GMT, against $1,494.05 late in New York on Friday. Silver rallied more than 6 per cent to a high of $37.94 and was later at $37.42 an ounce versus $35.60.

Among precious metals, silver bore the brunt of last week's commodities sell-off, down 25 per cent week on week by late Friday as investors liquidated positions. A near 1 per cent retreat in the dollar, which makes dollar-priced assets cheaper for other currency holders, is helping it to recover.

The euro bounced back on Monday as some investors viewed its sell-off last week on concerns about Greek debt as overdone, given the fact interest rate differentials between the euro zone and the US remain favourable.

However, technical indicators suggest the single currency's recovery could be temporary, while uncertainty over how the euro zone will tackle the prolonged debt crisis in some peripheral member countries is continuing to worry buyers.

"The big confusion in the whole picture is what people are going to do with the US dollar," said Macquarie analyst Hayden Atkins. "You have competing concerns, with a change in policy rhetoric in the US and mounting concerns over the euro."

"It is too hard to have a lot of conviction. That will probably weigh on pricing (for commodities), though maybe gold will outperform in that sort of environment.

"Silver has rebounded from the lows, but I think it is very difficult to justify more strength from a fundamental perspective," he added.

From a technical perspective, silver is also looking more vulnerable than gold after last week's rout, analysts said.

"Gold did not break any significant levels on the downside, so long-term investors were not forced out like in silver, where it was pure carnage," said Saxo Bank senior manager Ole Hansen.

Oil rallies

A rebound in oil prices also supported gold, underpinning investor confidence in commodities as an asset class. US crude futures rose more than 3 per cent, helped up by a soft dollar and bargain hunting after last week's selling.

On the wider markets, European shares fell, however, after top euro zone finance officials discussed the need for new adjustments to Greece's aid programme, with fund managers advising caution on the euro zone peripheries.

A sustained recovery in commodities will be reliant on the outlook for global growth, analysts said.

Among precious metals, this is especially the case for those with an industrial element, including platinum and palladium, and silver, last week's biggest loser.

"While cautious investor positioning is one obstacle faced by silver, a bigger roadblock is more likely to be the questions that hang over commodities more generally," said Swiss bank UBS in a note on Monday.

"To be sure, silver's sudden fall was a large reason for the general commodities washout, but fading economic momentum was another. For silver to climb convincingly back over $40, it needs the support of generally rising commodities and a stable risk appetite."

Among other precious metals, platinum was at $1,791.50 an ounce against $1,781.75, while palladium was at $726 against $713.88. – Reuters