August 12, 2006	Saturday	Rajab 16, 1427

LONDON, Aug 11: Gold bounced back on Friday as buying interest resurfaced on price dips and as traders saw a limited impact on air travel and oil demand from an aircraft bomb plot.

Spot gold climbed one per cent to hit an intraday high of $641.75 an ounce, up from $634.80/635.55 in New York late on Thursday, when the metal dropped more than 2 per cent. It was quoted at $641.40/642.00 by 1002 GMT.

The market seems to be waiting for something that could drive prices either up or down, said Michael Widmer, precious metals analyst at Macquarie Bank.

Going forward ... because you have got the slowdown in the US economy, because you have got interest rates peaking and because you still have inflationary pressures -- it will become more challenging for the US dollar to stay strong.” “And that's positive for the gold price, he added.

Gold often moves in the opposite direction of the dollar as the metal is generally seen as an alternative investment.

Safe-haven bullion is also seen as a hedge against inflation. Oil rebounded from a three per cent slump as traders saw a limited impact on air travel from an attempted trans-Atlantic aircraft bomb plot and fretted over Middle East violence.

The suspected plot raised the spectre of strikes to rival the Sept. 11, 2001 attacks on the United States that killed about 3,000 people and came 13 months after four British Muslim suicide bombers killed 52 people on London's transport network.

We recommend investors use any further dips in gold to build medium-term long positions... We still see gold materially higher on a three and twelve month view, UBS Investment Bank said in a daily note.

Gold rose initially on Thursday after British police uncovered the plot, but profit-taking erased most of the gains and gold tumbled to a one-week low at $633.90 an ounce.

Some dealers said gold remained attractive because of firm oil and the month-old war in the Middle East.

Tokyo gold failed to catch up with gains in the spot market as speculators booked profits after pushing up the most active contract to a three-week high on Thursday. Benchmark futures on the Tokyo Commodity Exchange fell 30 yen per gram to 2,408 yen.

In other metals, platinum rose to $1,241/1,246 an ounce from $1,238/1,243 late in New York, while palladium fell $1 to $318/323 an ounce. Silver rose to $12.28/12.34 an ounce from $12.04/12.14 in the US market.—AFP