LONDON, May 16: Gold held in a well-trodden range on Wednesday after bouncing off a one-month low three times in the past five trading sessions, aided by a weaker dollar and firmer crude oil prices.
Traders and analysts said the market was content to consolidate around $670 an ounce, with longer-term price indicators pointing to a steady rise in the weeks ahead towards $700 and above.
Spot gold dipped to $670.40/670.90 an ounce by 0951 compared with $672.30/672.80 late in New York on Tuesday.
HSBC Investment Bank lifted its price forecasts for all precious metals the previous day, citing the dollar's weakness, stronger oil prices and robust investment demand from the exchange-traded funds (ETFs). The bank lifted its gold price target to $660 an ounce from $630 for 2008 and raised the 2009 target to $600 from $550, but left its 2007 estimate unchanged at $680.
The dollar hit a one-week low versus the euro after a report on Tuesday suggested US inflation was well-contained, backing the view that the Federal Reserve might cut interest rates this year.
The US dollar as the fundamental driver with the strongest impact on gold currently might weaken further on US economic data released this afternoon, Dresdner Kleinwort said in a note.
Oil climbed further above $68, extending a rally fuelled by supply disruptions in Nigeria, the world's eighth biggest oil exporter.
Analysts noted gold had managed to hold last week's $664 low despite three attempts to push prices below there.
It's becoming quite a big level, UBS's Reade said, adding that a break below that point might bring further and rapid losses.
Platinum eased back to $1,324/1,329 an ounce from $1,330.00/1,335.00 in late New York trade. The market continueds to digest Monday's industry report by UK refiner Johnson Matthey.
Most expected prices to remain subdued, with most participants in London for the annual Platinum Week events.
Palladium was at $359/363 an ounce, versus $358/362 in New York, while silver fell to $13.15/13.19 an ounce from $13.21/3.24.—Reuters
