LONDON, Nov 29: Gold eased on Wednesday and silver prices steadied after hitting a six-month high as a recovery in the dollar prompted light selling by investors.

Analysts said the metals were expected to remain confined in tight ranges for the rest of the year.

If the dollar continues to weaken then gold will go higher, but it's going to be a grudging move higher rather than anything explosive, said John Reade, head of metals strategy at UBS Investment Bank.

What would have to change, I guess, is that we have to see investors suddenly have more risk appetite. And at the moment, in the gold market specifically, they are not really showing that, he said. Spot gold fell to $638.30/639.30 an ounce after moving in a tight $3 range. It closed at $639.30/640.30 in New York late on Tuesday.

The metal jumped to a three-month high of $641.75 on Monday because of a weakness in the dollar and firm crude oil prices, but pared gains on profit-taking.

The dollar rebounded after briefly hitting a 20-month low against the euro, while oil prices rose above $61 a barrel on expectations that colder weather in the US Northeast would boost demand in the world's top heating oil market.

Gold often moves in the opposite direction to the dollar and is generally seen as a hedge against inflation.

The physical sector saw selling by bullion holders in Indonesia but trading was generally muted.

Other than some selling from the Indonesians, the market is boring. But if the price stays at this level, I think selling will subside, a physical dealer in Singapore said.

Silver rose to its highest since mid-May at $13.77 an ounce before dropping to $13.66/13.71, against $13.67/13.74 in New York on Tuesday.

Dealers said the silver market was much smaller than the gold market and so prices were prone to sharp fluctuations.

Strong investor and speculative demand leave silver on target to re-challenge the $14 level, with interim resistance pegged at $13.85, said James Moore.

Platinum fell to $1,150/1,160 an ounce from $1,155/1,165 in the US market, while palladium dropped to $317/322 an ounce from $320/325.—Reuters