LONDON, Aug 23: Gold rose on Thursday as firmer stock markets helped soothe worries about credit markets stemming from problems in the US housing sector, but investors were wary of chasing prices higher.

Palladium rebounded after hitting nine-month lows the previous day, while platinum traded above a recent five-month trough. Silver hovered below a key level of $12 an ounce.

Spot gold was quoted at $663.60/664.20 by 1040 GMT, against $659.40/660.20 in New York late on Wednesday, when it rose more than $3.

After the sell off last week and the week before, we have seen the market has almost bottomed out and we are seeing a little bit of bounce now.

Equities have recovered a bit, which has given the market a certain degree of support, said a precious metals trader in London.

But I am not convinced that it’s a huge reversal coming back now, because the subprime (worry) is not over by any stretch of imagination.

We could see a return to the concern.

Gold has rebounded more than 3 per cent since falling to a seven-week low of $641.10 last Thursday, when investors sold gold and other metals for cash to cover margin calls on losses arising from a meltdown in the US subprime mortgage market.

Even though gold is traditionally seen as a safe haven in times of turmoil, the metal has behaved much like other assets in the recent months.

Physical buying emerges on every dip and funds are waiting to sell to raise cash on every rise. So gold stalls, said Unni, who pegged the downside at $635 an ounce.

Silver rose to $11.79/11.83 from $11.58/11.61 an ounce.—Reuters