US MIDDAY: gold moves up

US gold futures bounced early on Tuesday as buyers sought a bargain at the lows hit when crude oil dropped and the dollar advanced on the euro, traders said. Though gold's trading range remained contained, they added that physical buyers found value at the session's bottom.
"If you look at oil over the last week it's up about $5.00 and gold has hardly moved. So gold has a long way to go before it has a direct correlation with oil prices. I think the gold market has found some interested buyers at these levels," said a New York gold trader.
Most-active gold futures for August on the COMEX division of the New York Mercantile Exchange turned up $1.10 to $661.0 an ounce, trading in a lower but narrow range between $657.10 and $662.30 which was off Monday's peak at $662.90 which before that had been last seen on June 8.
Crude oil prices eased to near $72 a barrel on Tuesday after hitting a 10-month high on Monday. But losses were limited by a looming work strike in Nigeria that could hobble output in the world's eighth-biggest oil exporter. Traders also noted that gold prices have been tracking yields on the US Treasury's 10-year note.
On Tuesday, US government debt prices rose after housing starts fell sharply, reinforcing the view that the US housing sector would continue to drag on economic growth. "We're also moving in line with the 10-year note. When the 10-year note climbs so does gold," a gold trader said.
Benchmark bond yields, which move inversely to prices, slipped to their lowest levels in a week. "What is helping the Treasury market is this idea that housing is remaining a very big risk to the economy. The figures today, in many eyes reinforce that," said Tony Crescenzi, chief bond market strategist with Miller, Tabak & Co in New York. The pace of new US home construction fell by 2.1 percent in May, a lower rate than economists' forecast.
While the May housing numbers had an slight bearish impact on gold initially, traders said many participants are also still focused on longer term inflationary pressures. "And that is good for gold," a trader said. COMEX estimated 1000 am gold volume at 22,980 lots.
Spot gold was higher at $657.20/8.70 an ounce than $656.40/7.90 an ounce on Monday when it scaled a 10-day peak at $659.05. London banks set the fix at $656.30 an ounce. COMEX July silver slipped 1.50 cents to $13.22 an ounce. The range spanned $13.1150 to $13.27. Spot silver fell to $13.18/3.22 an ounce, down from $13.21/3.25 on Monday. London silver was fixed at $13.19.
NYMEX July platinum moved $4.50 lower at $1,295.0 an ounce. Spot platinum eased to $1,289/1,293. September palladium was up $0.25 to $375.25 an ounce. Spot palladium stood at $369.0/373.0.