LONDON, Aug, 7: Gold prices advanced on Monday on a softer dollar, Middle East worries that also firmed the oil market and on the view that another US interest rate rise is unlikely this week.

Market players said trading was cautious ahead of the US Federal Open Market Committee’s rate-setting meeting on Tuesday.

Higher rates tend to boost the dollar and pressure gold, which is seen as an alternative investment to the US currency.

Gold rose as high as $651.00 an ounce before easing to $647.25/648.25 by 0949 GMT, still up from $644.00/$645.50 late in New York on Friday.

Overall, the picture is still quite good (for gold). The Federal Reserve has got it’s meeting this week and the consensus is more or less for constant interest rates, said Michael Widmer, analyst at Macquarie Bank.

It’s becoming very difficult for the dollar to stay strong.

The dollar held near a two-month low against a basket of currencies after data showing lacklustre US job growth hardened expectations that the Federal Reserve would not raise interest rates this week.

For the moment, resistance around $655 is keeping gold capped while the...Middle East and softer dollar sentiment ahead of this week’s Fed meeting are providing support, said James Moor, analyst at TheBullionDesk.com.

Dealers said gold was expected to trade in a broad range in the short term, but might return towards a 26-year high of $730, recorded in May, in the medium term. Choppy prices have helped bullion exchanges to attract more business while mining companies gained from high prices.

Volatile gold prices lifted trade on Dubai’s fledgling gold futures exchange to more than 100,000 contracts worth $2.2 billion in May and June, the exchange’s latest figures showed.

Net profits at African gold miner Randgold Resources almost doubled in the second quarter of the year, with results buoyed by high prices and a new mine in Mali.

In other metals, platinum was at $1,246/$1,245 an ounce, compared with $1,242/$1,246 in the US market, while palladium fell to $320/$325 an ounce from $322/$327. Silver rose to $12.42/$12.50 an ounce from $12.31/$12.41.—Reuters