Gold range-bound ahead of U.S. economic data

LONDON, May 24 (Reuters) Gold was stuck in a tight range on Thursday ahead of U.S. data on new home sales, with investors watching the dollar and oil prices for market direction.

Traders said investment funds were cautious in taking new buy positions after suffering losses in recent weeks, especially after gold failed to breach $700 an ounce.

''It's very quiet. Gold did move with the dollar a couple of days ago, but at the moment it's in no-man's land. It is stuck between a trading range of $655-$670,'' said a European precious metals trader.

Spot gold was quoted at $659.10/659.60 by 1423 GMT, compared with $660.60/662.10 late in New York on Wednesday and last week's two-month low of $653.40.

''As our U.S. economist expects data being released today to come in far worse than the consensus predicts, we are looking for gold to recover further,'' Dresdner Kleinwort said in a note.

''Also the continued tight supply of gasoline in the U.S. should remain supportive for crude oil prices and thus for gold. However, the upside remains capped for the time being as physical demand from India is expected to show the typical seasonal decline with the start of the monsoon season,'' it said.

The dollar rose against the euro after an unexpectedly soft German business sentiment survey but was little changed against other majors ahead of U.S. housing data which may give clues on the interest rate outlook.

Oil hit a nine-month high above $71 a barrel, propelled by a strike threat to Nigeria's hobbled output and a report by U.N.

nuclear monitors that opened the way to tougher sanctions against Iran.

''Although gold once again tested the $665 level, sentiment would remain weak if it fails to cross this barrier imminently, with pressure likely to force a move toward $650,'' Standard Bank said in a daily market report.

PLATINUM DROPS In other metals, platinum rose as high as $1,299 an ounce before sliding to $1,289/1,294, against $1,300/1,305 in the U.S.

market. But prices are still up by about 5 percent from two months ago.

The metal has been supported by positive fundamentals and the launch of exchange traded funds (ETFs).

Zurich Cantonal Bank said its ETFs have attracted investment equal to 25,000 ounces of platinum and 133,000 ounces of palladium since their launch on May 10. [ID:nL24575193] ''It's a really good start. The bigger their success is, the more people they attract,'' said Michael Widmer, director of metals research at Calyon Corporate and Investment Bank, referring to inflows into the platinum fund.

''Buying from the ETF does support the platinum price and you are going to have a tightly balanced market, probably a small deficit,'' he added.

Another fund by London-based ETF Securities has accumulated about 12,000 ounces of platinum since its launch in late April.

For more information on ETFs, please double click on .

Palladium was quoted at $369/374, down $4 from its last quote in New York. Silver was flat at $12.99/13.03.

REUTERS SR GC2042