Gold rises with equities again, open interest down

(Reuters) - Gold rose for a second consecutive session on Tuesday, extending the previous day's rally, as strong physical demand and a weaker dollar amid economic optimism lifted the precious metal.

Bullion -- a traditional safe haven which has recently followed riskier assets -- tracked equities' gain on a rebound in U.S. consumer confidence and as investors across the board eyed further progress on a solution to Europe's debt crisis.

Overall market liquidity in U.S. gold futures fell to its lowest level since April, data from the most recent U.S. futures regulator showed, while investors continued to shore up bullion holdings by buying gold-backed exchange traded funds.

"It's all the macroeconomic events that are driving every single market including gold, not market fundamentals" said Ron Lawson, partner of commodities investment firm LOGIC Advisors.

"The fundamental reasons for owning gold are as good today as they were when gold was trading $300 to $400 lower."

Spot gold was up 0.5 percent at $1,719.10 an ounce by 3:00 p.m. EST (8:00 p.m. British time).