Gold stays bullish on weak dollar, Iran tension

TOKYO, Dec 28 (Reuters) Gold prices were little changed on Thursday, but the metal retained its bullish trend after solid gains in New York thanks to a weakening dollar, while strength in Japanese futures provided additional support.

Traders were keen to keep their buy positions due to growing geopolitical tensions after the U.N. Security Council voted unanimously on Saturday to impose sanctions on Iran's trade in sensitive nuclear materials and technology.

At 0630 GMT, gold was trading at $627.80/628.80 an ounce, slightly higher than $627.50/628.50 late in New York on Wednesday. It was moving in a tight range of $626.25 to $627.80 during Asian trading.

''The market is now focusing on Iran and a slightly weaker dollar to buy gold after seeing that it was solid around $620,'' said Shuji Sugata, an assistant manager at Mitsubishi Corp.

Futures and Securities Ltd. in Tokyo.

''The market lacks the energy to extend its gains, but the outlook for gold looks strong.'' Cash gold had reached a two-week high of $629.50 on Tuesday, but profit-taking orders appeared to be blocking the topside.

Its high on Wednesday was at $629.10.

Gold also faced technical resistance at its 30-day moving average around $629.

But the cash price gained support as Tokyo futures prices were supported by strong technical buying after they broke through key trend lines earlier in the week.

The benchmark December contract on the Tokyo Commodity Exchange closed at a session high and a fresh three-week high of 2,425 yen a gram, up 0.75 percent from the previous close.

Traders said sentiment turned strong particularly after the contract on Tuesday broke through 2,411 yen, which was last reached on Dec. 5.

Slight falls in the dollar against the euro and the yen from recent highs also spurred some buying of gold.

A weaker dollar usually supports gold, which largely is priced in dollars globally, because it becomes cheaper in key overseas trading areas such as Europe and Asia.

''With only two business days left for the year, there are few players willing to drive prices up sharply,'' Sugata said.

''The underlying trend is bullish and we want to see whether this trend will be carried over to next year.'' Platinum rose to $1,122/1,127 an ounce from $1,115/1,120 in New York.

Firmness in Tokyo platinum futures supported spot platinum.

Platinum has been supported around $1,100 as Chinese buyers were rumoured to be buying sporadically on price dips, but plenty of profit-taking orders above $1,130 capped the topside.

Palladium was little changed at $323/328 an ounce from $324/328 on Wednesday.

Silver rose to $12.77/12.82 an ounce from $12.63/12.70 late in New York.

REUTERS CS DB1249