July 29, 2006	Saturday	Rajab 2, 1427

LONDON, July 28: Gold drifted lower in Europe on Friday as investors locked in profits ahead of the weekend, but sentiment remained positive on a weaker dollar and firm oil prices.

Spot gold climbed as high as $637.25 an ounce in Asian trade, but ran out of steam before reaching Thursday's one-week high of $640.50. It was quoted at $631.00/632.00 by 0943 GMT, down from $633.50/634.25 in New York the previous day.

After yesterday's rally I wouldn't be surprised if we'd see some long liquidation ahead of the weekend, which should keep gold within a $625-$635 range today, said Alexander Zumpfe, a trader at Heraeus Metallhandels-Gesellschaft mbH in Germany.

Falls in Tokyo Commodity Exchange gold futures , also put a drag on the spot price. The benchmark June contract on the exchange finished down 14 yen at 2,363 yen per gram.

Traders will be keeping a close eye on the dollar's reaction to today's GDP (gross domestic product) reading, but despite the ongoing unrest in the Middle East traders seem reluctant to build substantial longs, said James Moore, analyst at TheBullionDesk.com.

The dollar fell towards the previous session's two-week low against the yen and held steady versus the euro ahead of US growth data, due at 1230 GMT, that should clarify the interest rate outlook.

Gold often moves in the opposite direction to the dollar as some investors use it as an alternative to the U.S. currency.

-Reuters