Gold rebounds, eye on U.S. economic data

SINGAPORE, May 31 (Reuters) Gold gained on short-overing on Thursday but was likely to trade in a tight range as investors awaited the release of U.S. data, which may cool expectations of interest rates cuts.

The market is waiting for Thursday's revision of U.S.

first-quarter GDP figures and Friday's Labor Department May employment report after the U.S. dollar rose following the release of the Federal Reserve's policy minutes.

''Everything is up to the Fed,'' said Darren Heathcote of Investec Australia in Sydney.

The physical sector was subdued due to a holiday in Singapore, a centre for bullion trading in Southeast Asia.

Tokyo futures failed to sustain the previous day's gains because of a rebounding yen.

Spot gold rose to $655.00/656.50 an ounce from $652.45/652.95 an ounce late in New York on Wednesday, when it dropped more than $3 in New York on the back of a firmer dollar.

Key April 2008 gold futures on the Tokyo Commodity Exchange ended the morning session down 7 yen per gram at 2,590 yen ($21.31), having risen 12 yen higher on Wednesday due to a weaker yen.

''The market is really bereft of anything else. There's no new geopolitical sort of events causing a stir and oil prices aren't doing too much anyway,'' said Heathcote.

''There's been a little bit of a break from the link that gold has had with oil for quite a while. It's all going to be dollar-led for a very short-term, forseeable future,'' said Heathcote, who expected gold to trade in a $652 to $658 range.

Gold rallied to its highest level in 26 years at $730 an ounce in mid-May 2006 as investors diversified their portfolios on Middle East tensions, record-high oil prices that raised fears of inflation as well as uncertainties in the U.S.

dollar's outlook. It hit a record high of $850 an ounce in 1980.

The euro was steady on Thursday at $1.3430 after falling to $1.3406 the previous day, its weakest since mid-April.

The dollar slipped to 121.51 yen but was within sight the 3-1/2-month high of 121.89 yen hit last week.

Minutes from the Fed's May meeting released on Wednesday showed that policymakers felt inflation was their main worry and that growth should recover as the year drags on.

The Fed has held rates steady for nearly a year at 5.25 percent even as investors had expected the housing market troubles to lead to a rate cut, and the European Central Bank and Bank of England are seen raising rates further.

A firm dollar reduces gold's appeal as an alternative investment.

Platinum rose to $1,263/1,268 an ounce from $1,259/1,264 late in New York.

Palladium fell to $364/369 from $365/369.

Silver was at $13.15/13.19 an ounce, hardly changed from $13.15/13.18 an ounce.

Precious metals prices at 0235 GMT Last Net Change Pct Move Turnover (lots) TOCOM Gold 2590.00 -7.00 -0.27 29039 TOCOM Platinum 4873.00 -16.00 -0.33 18254 TOCOM Silver 516.20 0.00 +0.00 1094 TOCOM Palladium 1444.00 0.00 -0.82 275 Spot Gold 655.50 Spot Platinum 1263.00 Spot Silver 13.15 Spot Palladium 364.00 Change so far in 2007 Metal Latest bid End prev year Pct Move TOCOM Gold 2590.00 2445.00 +5.93 TOCOM Platinum 4873.00 4254.00 +14.55 TOCOM Silver 516.20 493.30 +4.64 TOCOM Palladium 1444.00 1255.00 +15.06 Spot Gold 655.50 636.10 +3.05 Spot Platinum 1263.00 1132.00 +11.57 Spot Silver 13.15 12.85 +2.33 Spot Palladium 364.00 332.00 +9.64 Euro/Dollar $1.3429 Dollar/Yen 121.54 TOCOM prices in yen per gram, spot prices in $ per ounce.

($1=121.51 yen) REUTERS KR DS1141