Array

SINGAPORE, Apr 28 (Reuters) Gold rose almost $3 on fund buying on Friday after U.S. Federal Reserve chief Ben Bernanke signalled that rate rises may be nearing an end -- a move which boosts bullion's allure as an alternative investment.

Spot gold hit a high of $637 an ounce before retreating to $636.75/637.50 an ounce, higher than $634.20/635.20 late in New York.

''This is probably a reaction in Asia to Ben Bernanke's rate comments,'' said a dealer in Singapore, referring to the gains.

N M Rothschild pegged support at $625 and resistance at $645.

Gold saw volatile trade on Thursday, when it touched a low of $627.20 an ounce after China raised interest rates. The metal later regained some ground after the dollar dropped on Bernanke's comments but remained below last week's 25-year high of $645.75 an ounce.

China's central bank raised its benchmark one-year lending rate to 5.85 percent from 5.58 percent to try to cap a surge in credit and investment that might destabilise its fast-growing economy.

In the currency market, the euro was little changed at $1.2530 near a seven-month peak of $1.2549 hit on Thursday.

An end to the Fed's current rate-increasing cycle, which widened the U.S. advantage over other major currencies, would largely remove a major pillar of support for the dollar that helped it rally 12 percent last year, especially as the euro zone and Japan both could be tightening policy later this year.

The benchmark gold future on the Tokyo Commodity Exchange, currently April 2007, fell 8 yen per gram to 2,373 yen ($20.80) per gram, tracking losses in New York.

Silver was quoted at $12.60/12.70, hardly changed from $12.61/12.71 in New York, and well below a 23-year peak of $14.68 hit last week.

Silver fell on Thursday after briefly rising 2 percent on news the Barclays iShares Silver Trust had been declared effective by the U.S. Securities and Exchange Commission.

The decision removed the final regulatory obstacle to trading in the innovative fund, which some analysts and traders said could lift silver investment demand.

Platinum rose to $1,139/1,140 an ounce from $1,136/1,140 late in New York but off a new record high of $1,147 hit the previous day.

Palladium was little changed at $358/363 an ounce, compared with $359/363.

Precious Metals Prices by 0131 GMT* Gold 636.75 3.05 +0.48 Platinum 1139.00 3.00 +0.26 Palladium 358.00 -1.00 -0.28 Silver 12.60 -0.06 -0.47 Change so far in 2006 Metal Latest bid End prev year Pct Move Gold 636.75 517.20 +23.11 Platinum 1139.00 968.00 +17.67 Palladium 358.00 254.00 +40.94 Silver 12.60 8.81 +43.02 * The closing prices used to calculate the net change may differ from New York's last quoted prices.

($1=114.07 yen) REUTERS CS PM0933