May 20, 2006	Saturday	Rabi-us-Sani 21, 1427

LONDON, May 19: Gold prices pared overnight gains in European trade as they tracked trends in the dollar, but the buyers that took the market to recent 26-year highs should soon return, dealers said.

We might get people encouraged to buy back at these levels and drive it higher again, said Robin Bhar, analyst at UBS Investment Bank.

We do expect more volatility...but today seems to be a day of consolidation.

Spot gold rose as high as $688.50 an ounce in Asian trade before falling to $681.50/682.50 by 0939 GMT, still up from $680.30/681.10 late in New York on Thursday, when it dropped more than $10 as investors sold to cash in their profits,

Gold surged to a 26-year high of $730 an ounce last week, a gain of 22 per cent this year. It hit a record high of $850 in January 1980.

Bullion dealers were braced for choppy trade.

Take out a coin and toss. Whatever it says just follow it...I will stick to my trading range of $670 to $730 for the moment until proven otherwise, said a bullion dealer in Singapore.

James Moore, precious metals analyst at TheBullionDesk.com, said gold remained comfortably bullish in the long term given the Iran nuclear issue, high oil prices and generally bearish dollar sentiment.

All that looked set to push bullion towards $850 later in the year, he added.

Standard & Poor’s, the world’s leading index provider, and TSX Group announced plans this week to create a real-time global gold index. Based in Canada, the index will track key gold mining companies around the globe.

We view the sell-off of recent days as the start of a correction in a bull market that has further yet to run. Some of the weaker longs have been cleaned out, with only modest damage to the gold price, said Commonwealth Bank of Australia.

Platinum rose as much as 1.4 per cent on fund buying, but the metal remained below this week’s record high of $1,336 an ounce. Spot platinum rose as high as $1,318 an ounce before falling to $1,305/1,315, compared with $1,300/1,308 in New York.

Johnson Matthey, the world’s top platinum distributor, said on Monday demand for the metal was set to outpace supply for the eighth year in a row in 2006.

Palladium rose to $362/367 an ounce from $356/361, while silver was at $12.58/12.68 an ounce from $12.56/12.66.—Reuters