LONDON, Oct 14: Gold drifted in a narrow range in Europe on Friday ahead of the release of key U.S. price data that could set direction for the metal, which surged to its highest in nearly 18-year this week.

The metal was seen consolidating and appeared vulnerable to liquidation by funds, but physical demand in key consuming countries was providing some support, dealers said.

Spot gold fetched $470.40/471.15 a troy ounce by 1009 GMT, marginally down from $470.90/471.70 last quoted in New York on Thursday. It climbed to $480.25 on Wednesday, the highest since early 1988.

The market is very closely focused on what’s going to happen with the US CPI release this afternoon, said John Reade, precious metals analyst with UBS Investment Bank.

The market was waiting for the US consumer price index (CPI) for September, due at 1230 GMT, which could reinforce expectations the Federal Reserve will keep raising interest rates. The data could affect the dollar.

Economists polled by Reuters have, on average, forecast a 0.9 per cent rise in the September CPI compared with a 0.5 per cent increase in August. Excluding the volatile food and energy items, it was seen up 0.2 per cent versus a 0.1 per cent rise the previous month.

The dollar inched towards a recent 17-month peak against the yen and three-month peaks versus the euro on Friday.

Traders also noted that trouble at Refco Inc., the commodities and futures brokerage whose shares have fallen more than 60 per cent this week, had some impact on the market.

In other precious metals, spot platinum slipped to $923/928 an ounce on profit-booking from $928/932 in late New York trade, well below the previous day’s 25-1/2-year peak of $943 an ounce.

Anglo Platinum, the world’s biggest platinum producer, lowered its 2005 output forecast last month after a blast shut one of its smelters. It expects to produce 2.45 million ounces of refined platinum instead of 2.6 million.

Spot silver traded at $7.67/7.70 an ounce, unchanged from New York, while palladium was at $204/209 compared with $207/211. —Reuters