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LONDON, Aug 1 (Reuters) Gold gyrated in a tight band on Tuesday as a marginal rise in the dollar pressured the market while firm oil prices and the conflict in the Middle East prompted investors to buy.

Spot gold rose as high as $637.50 an ounce before dipping to $630.90. It recovered to $634.50/636.00 by 0943 GMT, compared with $634.70/635.45 in New York late on Monday.

''The name of the game is to buy on the dip and take profits on the move higher,'' said Frederic Panizzutti, metals analyst at MKS Finance.

''There is good potential on the upside but the market would remain shy,'' he added.

Dealers said gold was likely to face stiff resistance at $650, but any move down to about $620 was expected to attract fresh buyers and support the market.

''On the whole, things are a little bit difficult. The market hasn't got enough behind it to drive it forcefully one way or the other at the moment,'' said Darren Heathcote, head of trading at Investec Australia in Sydney.

''At the moment, markets are looking at the Fed and waiting for further news, either escalations or peace in the Middle East,'' he said.

Ignoring growing calls for a ceasefire, Israel blasted eastern and southern Lebanon from the air on Tuesday and prepared to advance deeper into Lebanese territory to push Hizbollah guerrillas back from the border. [ID:nL01573144] In the currency market, the dollar edged up from this week's three-week low against major currencies as investors grew hesitant about tilting positions aggressively before U.S. data and a speech by Treasury Secretary Henry Paulson.

The June Personal Consumption Expenditure (PCE) index, a closely watched gauge of inflation, and the Institute for Supply Management's manufacturing index for July are due later.

BROAD TRADING RANGE ''The current broad $600-$650 range should continue to contain the trade across the remainder of the summer holiday period, while Israel's decision to widen its ground offensive in the Lebanon should provide support,'' James Moore, analyst at TheBullionDesk.com, said in a daily note.

Gold often moves in the opposite direction to the dollar as the metal is generally seen as an alternative investment. Some investors buy gold as a hedge against inflation.

Oil held steady near $75 a barrel as dealers remained on edge over the Middle East and after heat waves in the United States and Europe triggered a surge in gas prices.

In industry news, sales for Dubai's gold industry dropped 30 percent in the first half of the year as gold prices soared, Tawhid Abdullah, chairman of the Dubai Gold and Jewellery Group, told Reuters. [ID:nL01774903] In other precious metals, silver inched up to $11.32/11.42 an ounce from $11.29/11.39 late in New York. Palladium was flat at $310/315, while platinum eased to $1,225/1,230 from $1,228/1,234.

South African miner Lonmin Plc said it was on track to produce around 1 million ounces of platinum this fiscal year after record production in the first nine months of the year.

REUTERS PKS RN2023

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