October 20, 2006	Friday	Ramazan 26, 1427

LONDON, Oct 19: Gold bounced on bargain hunting but struggled to stay above $590 an ounce on Thursday, as dealers awaited direction from the energy market ahead of an Opec meeting on output cuts.

Spot gold hit a high of $591.75 an ounce and slipped to $588.60/589.40 an ounce by 0514 GMT, still higher than $587.60/588.60 late in New York on Wednesday.

It's really range trading at the moment. I don't think we are going to see any new highs, said a dealer in Singapore.

The downside is still $570, while $605 will be the upside target. Physical buying does help the market but it's just that there's no news to push it up further.

Unless, something comes up out of North Korea or the oil market, he said.

Dealers said purchases from jewellery makers and investors resurfaced at lower levels and main buyer India was still in the market ahead of the Diwali festival on Saturday.

Gold attracted buying below $590, said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong, but some investors could shift their attention to stock markets after the US Dow rallied to a record high on Wednesday.

Gold fell more than $2 an ounce in New York to track weaker oil and after a key US inflation reading came in as expected and housing starts rebounded, reinforcing a view that interest rates are not headed lower soon.

The metal had reached a two-week high of $597.50 on Tuesday — just below a key barrier of $600.

Falling prices and a big crude oil inventory jump will keep pressure on the meeting in Qatar to finalise an agreement to cut 1 million barrels per day from either actual production or from the cartel quota.

Gold prices often take direction from the oil market, because rising energy costs tend to boost the precious metal's appeal as a hedge against inflation.

Key gold futures on the Tokyo Commodity Exchange, currently August 2007, fell four yen per gram to 2,269 yen.

Platinum fell to $1,078/1,083 an ounce from $1,085/1,090 late in New York. Palladium also dropped to $327/332 an ounce from $329/334 in New York. Silver edged up to $11.74/11.80 an ounce from $11.69/11.76 late in New York.—Reuters