LONDON, March 11: Gold stumbled in European trade on Tuesday as the dollar regained ground against the euro and the UN Security Council appeared deadlocked over war in Iraq.

“Gold got slapped. It was probably more to do with the news that no matter what happens the French are going to slap down the second resolution,” one London bullion trader said.

Gold dropped by almost $5 at one point as heavy profit-taking by funds pushed the market down towards the lower end of its recent $353-348 range, before it bounced back slightly.

Spot gold was quoted at $350.70/351.45 an ounce at 1615 GMT, down from $354.00/354.75 at the New York close on Monday but off a session low of $348.20.

Traders expected the market to hold above $348 for the moment. Should prices go under that level, however, they might rapidly slide to $344 or even $341 — a low from mid-February.

“The market is really trying to make a case out of all the war rhetoric. That is clearly influencing the market, but there is nothing really new coming out,” said Peter Hillyard of ANZ investment bank.—Reuters