LONDON, Dec 8: Gold eased after trading in a tight $3-an-ounce range on Friday, with investors carefully trading the metal ahead of US payrolls data that may determine gold's short-term direction.

Silver was erratic but dealers said it may resume its uptrend in coming days after staging a recovery on Thursday, when it rebounded to hit a high of nearly $14 an ounce after falling to a one-week low of $13.42.

Fundamentally, I am still fairly friendly towards gold. But we are seeing some profit taking from funds, which is keeping the market a bit under pressure,” said a precious metals analyst in London.

It's nearly the end of the year and they will be happy to take profits and not take too many risks, but if the dollar remains around these levels, I think gold could bounce. Spot gold was quoted at $629.90/63'.40 an ounce by 1104 GMT, compared with $630.90/632.40 in New York late on Thursday, when it had dropped to a two-week low of $624.90.

The dollar shuttled in fairly narrow ranges as investors braced for the US non-farm payrolls for November, due at 1330 GMT, that could help decipher what the Federal Reserve's next move might be on interest rates.

Gold often moves in the opposite direction of the dollar. Investment bank Merrill Lynch lowered its 2006 gold price forecast to $603 an ounce from $625, but left unchanged its prediction for 2007 at $675.

It said in a report that gold's supply-demand fundamentals remained positive over the medium term, and raised its 2008, 2009 and 2010 gold forecasts to $650, $625 and $600 from $600, $600 and $550 respectively.

Some dealers expected gold to trade in a volatile $620 to $690 range until the end of the year. Gold has lost more than 10 per cent since rallying to a 26-year high of $730 in mid-May.

It's clear that following a bout of profit taking over the last few days, there are investors still happy to buy on dips around technical levels, such as that at $625, said Investec Australia in a report.

In other precious metals, silver inched down to $13.81/13.88 from $13.87/13.94 in New York.

The metal, which rallied to a six-month high of $14.17 on Tuesday, has been supported by speculative buying from investment funds through silver exchange-traded funds.

Platinum fell to $1,119/1,124 from $1,122/1,127 in New York but was off a five-week low of $1,094.—Reuters