LONDON, Oct 3:Gold rebounded on Wednesday as a sharp sell-off attracted bargain-hunters and investors, but the market awaited key US economic data due this week for clearer short-term direction.

Platinum, palladium and silver also rallied after being hit by heavy fund selling.

Spot gold rose to $736.00 an ounce before easing to $732.25/732.95 by 1003 GMT. The metal closed at $731.00/731.80 in New York late on Tuesday, when it fell to a one-week low of $724.35 after a rise in the dollar prompted investors to take profits from this week’s 28-year high of $747.65.

Profit taking after an aggressive rally is quite common, especially with gold having gone against gravity for one month in a row, said Pradeep Unni, precious metals analyst at Vision Commodities in Dubai.

But market willingness to buy on any retreat from the highs is still intact and, as long as it stays, aggressive sell-offs will be deferred.

Probably I wouldn’t go long at the moment, said Michael Widmer, director of metals research at Calyon Corporate and Investment Bank.

At least in the very short term, I am not too bullish, but for the end of the year, I still hold my call at $800, he said.

Tuesday’s correction followed gold’s 17 per cent rally from an August low of around $641.

It has gained on record high oil, tensions in the Middle East, investor demand through exchange traded funds (ETFs) and a cut in US interest rates.

The short-term direction for gold is likely to depend heavily on the dollar, with the yellow metal still looking quite vulnerable to further profit taking, said James Moore, precious metals analyst at TheBullionDesk.com.

The longer-term outlook for gold is still extremely positive though and the market will continue to benefit from investor inflows, as investors factor some form of safe-haven protection into their portfolios, he said in a daily note.

Growth in ETFs continued, with gold used to back New York’s StreetTRACKS Gold Shares, the most popular of its kind, staying at a record high of 578.03 tons.

In other bullion markets, benchmark August 2008 gold futures in Tokyo ended 3 yen per gram higher at 2,764 yen. It hit an intraday low of 2,746 yen -- its lowest in nearly a week.

US futures rose, with the most active December contract gaining $1.6 an ounce to $737.90 in electronic trade. On Monday, it hit a 28-year high of $755.70.—Reuters