Gold rebounded on Thursday as bargain hunters returned to the market amid worries about possible military action by Turkey in northern Iraq, high oil prices as well as a weak dollar.

Platinum hit a record high as speculators poured money into the precious metal following news about the closure of a mine in main producer South Africa.

Spot gold rose to $760.20/761.00 an ounce from $754.10/754.90 late in New York on Wednesday, when it dropped $4 to track declines in crude oil. Gold was still within striking distance of this week's 28-year high of $766.60.

If they invade Iraq, there may be some kind of terror attacks on Turkey, said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

We don't know if this will happen soon. But I think the most important thing is the G7 meeting to see whether they have a view on the dollar. For the time being, we can say support is at $750, he said.

Turkey's parliament resoundingly approved a motion on Wednesday allowing troops to cross into northern Iraq to hunt down Kurdish rebels there, but its Western allies and Baghdad urged Ankara to refrain from military action.

Washington fears a Turkish incursion could destabilize the most peaceful part of Iraq and possibly the wider region by encouraging others such as arch-foe Iran to intervene.

The dollar fell to 116.35 yen, its lowest since early October, hit by a 10.2 percent tumble in U.S. housing starts to an annual rate of 1.191 million units, the slowest since March 1993. The euro was hardly changed at $1.4205.

The data enhanced the chances of Federal Reserve policy-makers cutting benchmark interest rates again from the current 4.75 percent, which should diminish the dollar's appeal to global investors. Fed officials next meet on October 30-31.

The yen was supported by expectations that Group of Seven finance officials on Friday may discuss currencies in the context of the overall economy, which has prompted investors to trim risky trades that involve selling the yen.

Japanese precious metals jumped on active bargain hunting by retail players following a sharp drop the previous day, lending support to the cash price.

Benchmark August 2008 gold on the Tokyo Commodity Exchange ended the morning session 23 yen higher at 2,879 yen after falling 51 yen at the close on Wednesday.

U.S. crude fell 12 cents to $87.28 a barrel on Thursday, having reached a record high of $89 a barrel the previous day before profit taking kicked in.

Gold is in an upward trajectory and it may stay that way in spite of high possibilities of a reversal, said Pradeep Unni, an analyst at Vision Commodities in Dubai.

Immediate support is at $750 and any slide below this would mean that gold may slide to $740 and $736 levels. However, such a correction will do more good to the bull market, said Unni, adding that bargain hunters were likely to buy on a price dip.

COMEX gold futures were up in Asia, with the December contract trading up $2.7 at $765 from the New York settlement on Wednesday.

Platinum rose to an all time high of $1,445 before dipping to $1,442/1,447 an ounce, up from $1,435/1,440.

South Africa's Northam Platinum Ltd said it had shut its mine early on Tuesday after a worker was killed in a rockfall. The mine produces about 325,000 ounces of platinum a year.

Palladium inched up to $370/375 an ounce from $369/372 in New York.

Silver rose to $13.68/13.71 an ounce from $13.58/13.63 late in New York.

Precious metals prices at 0300 GMT

Metal Last Change Pct chg YTD pct chg Turnover

Spot Gold 760.30 5.70 +0.76 19.60

Spot Silver 13.68 0.07 +0.51 6.46

Spot Platinum 1442.00 7.00 +0.49 27.39

Spot Palladium 370.00 1.00 +0.27 11.45

TOCOM Gold 2879.00 23.00 +0.81 17.75 62736

TOCOM Platinum 5250.00 81.00 +1.57 23.41 21288

TOCOM Silver 516.50 7.10 +1.39 4.70 703

TOCOM Palladium 1416.00 23.00 +1.65 12.83 331

Euro/Dollar 1.4226

Dollar/Yen 116.42

TOCOM prices in yen per gram, except TOCOM silver which is priced in yen per 10 grams. Spot prices in $ per ounce.

(Additional reporting by Chikafumi Hodo in Tokyo)