Gold in tight range, hovers near 11-month high

TOKYO, Apr 17 (Reuters) Gold edged down on Tuesday as light profit-taking limited advances, but the metal held near its 11-month high reached the previous day as fresh funds flowed into the market because of its bright technicals.

Asian buyers were detected buying cash gold sporadically, giving the metal solid support, but trading was nervous as it approached the psychological level of $700 an ounce.

''Fresh funds are flowing into gold. Buying by Asian end-users is also spotted as market fundamentals are healthy,'' said Shuji Sugata, manager at Mitsubishi Corp. Futures and Securities Ltd.

''The trend is clearly up. The market is keen to challenge the psychological point of $700, but the market is a bit nervous about pushing up rapidly.'' As of 0301 GMT, spot gold was at $688.90/689.40 an ounce, compared with $690.90/691.40 late in New York the previous day.

On Monday, bullion rose as high as $691.00 an ounce -- the highest since May 17 last year -- surpassing the 2007 peak of $689 set on Feb. 26, before a tumultuous sell-off in the global financial markets.

New investment funds have been moving into gold since the start of the second quarter after seeing it climb more than 5 percent since the start of the month.

STRONG EURO, ETF A weaker dollar against the euro and firm energy prices have encouraged buying in gold and other precious metals.

The European currency was bullish due to expectations that the European Central Bank may raise rates in June and beyond.

This has helped the euro to stay strong against the dollar, which traded around $1.3530 little changed on Tuesday and near a two-year high of around $1.3570 hit on Monday.

A lower dollar makes gold cheaper for investors holding other currencies.

U.S. crude oil futures were little changed, but held strong above $63 a barrel on Tuesday as traders awaited word on the estimated restart of a major oil pipeline between Canada and the United States.

Gold is generally seen as a hedge against oil-led inflation.

''$700 will be very important and a break beyond that will intensify the uptrend towards the high reached last May,'' said Mitsubishi's Sugata, referring to spot gold's 26-year high of $730 reached in May 2006.

''In this mood, there are many bargain-hunters willing to buy gold on dips, which should make it supported around $680.'' In Japan, the benchmark February gold contract on the Tokyo Commodity Exchange rose as high as 2,679 yen ($22.38) a gram -- the highest for a benchmark since Feb. 27.

Prices of other precious metals edged up from late New York levels.

On Monday, palladium and platinum hit 11-month and five-month peaks, respectively, on news of a new exchange-traded fund.

Switzerland's Zurich Cantonal Bank said it planned to launch exchange-traded funds (ETFs) based on platinum, palladium and silver from the next month.

ETFs allow investors to gain exposure to commodity markets without worrying about setting up futures trading accounts or taking physical delivery. Sponsors of such funds buy a matching amount of the commodity from the market to keep in bank vaults.

Platinum rose to $1,274/1,279 an ounce from $1,271/1,276 in New York.

Palladium edged up to $374/379 an ounce from $372/377.

Silver inched up to $14.06/14.09 an ounce from $14.03/14.06 late in New York.

($1=119.73 yen) REUTERS SR HT1138