Gold off one-week low, bides time before U.S. data

SINGAPORE, Nov 9 (Reuters) Gold rebounded on Thursday after falling to a one-week low the previous day on profit taking as Democrats gained control of the U.S. House of Representatives, but the market lacked direction ahead of U.S.

trade data.

With the dollar showing little reaction to the Democrats' victory, dealers turned to U.S. economic fundamentals.

Thursday's data may show the deficit narrowing to $66.0 billion in September, from the record $69.9 billion the previous month.

Spot gold rose as high as $618.40 an ounce as investors and jewellers bought the metal on price dips. Gold hit an intraday low of $614.90 an ounce -- not far from a one-week low of $612.90 hit on Wednesday.

''There's of course physical buying when the price dropped below $620 for the first time,'' said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

But gold may try the lower levels again before charging higher, with $630 likely to be the upside target, said Leung.

''We can say $610 should be the support level, and the short-term upside is $625,'' he added.

Gold was quoted at $615.20/615.95 late in New York.

Some dealers said prospects for gridlock in Washington between a Democratic Congress and an unpopular Republican president could weigh on the dollar and renew support for gold, which was trading below a 26-year high of $730 hit in mid-May.

After a victory in the House of Representatives, Democrats also took control of the Senate with a win in Virginia, media reports said.

''I think the market seems in two minds at the moment as to whether we are going to see much higher gold or a retracement back to recent weakness,'' said Darren Heathcote of Investec Australia.

''There may be some physical buying at lower levels, buying on the dips,'' said Heatcote, adding that gold may be inspired to move towards $630 if it regained $620 later in the day.

Gold rose to its highest in two months around $629 on Monday in the run-up to the U.S. mid-term elections before investors cashed in.

In the currency market, the dollar was within sight of a six-week low against the euro on Thursday as investors looked ahead to U.S. trade figures due at 1330 GMT.

The dollar was little changed at 117.85 yen . The euro was flat at $1.2760.

The benchmark contract on the Tokyo Commodity Exchange , October 2007, fell 23 yen per gram to 2,369 yen ($20.09), reflecting losses in New York's COMEX market.

Platinum rose to $1,168/1,173 an ounce from $1,165/1,171 an ounce in New York.

Palladium eased to $324/339 an ounce from $327/332.

Silver edged up to $12.51/12.56 an ounce from $12.44/12.51 late in New York.

($1=117.90 yen) REUTERS KR HS1111