Comex gold bounced from two-week lows to end higher on Tuesday, helped by a weaker dollar and Asian physical buying, and by traders' reluctance to keep selling the safe-haven metal before on Friday's market holiday.
Some players stayed home on Tuesday to observe Passover and US exchanges will be closed good on Friday before Easter on Sunday.
June gold ended up $3.10 at $419.40 an ounce, trading from $416.20 to $420.70. On Monday, it fell to $414.50, as the euro fell to a four-month low at $1.1979.
On Tuesday the five-year-old currency was up at $1.2100/04, enhancing the bullion-buying power of European investors. "We also benefited from where we held at yesterday's low," said analyst Timothy Evans at IFR/Pegasus.
"We'd broken below support at $416 but closed above it yesterday. That has technically got us some short-term relief."
Gold is still down some $13 from last week's 15-year high at $433.00 an ounce.
Dealers said there was some disappointment that gold only went $1 above the January 6 $432.00 high, hit during intense dollar disinvestment and the euro's rise toward lifetime highs in February.
The greenback's current strength may be acting as a cap on gold, dealers said, even though the revival of safe-haven buying has loosened the tight gold/euro correlation.
"The amazing thing about gold over the past couple of weeks is that it has at times broken its linkage with the currency market, where gold has really outperformed the currencies against the dollar," Evans said.
"At least from that currency perspective, that suggests that gold has become somewhat overvalued."
Investors have turned to gold for portfolio insurance as the United States has stepped up military action against Iraqi insurgents.
Followers of radical cleric Moqtada al-Sadr fought pitched battles with foreign troops in Shia strongholds on Tuesday and vowed to pursue an uprising that has claimed 130 lives in three days. Nineteen US troops have died in Iraq since on Sunday.
Volume was light before the holidays, and floor brokers said the $420 area was supposed to be good resistance. "You probably have to get through some stops over $421 to see it take off," said one, referring to previously placed buy orders.
Spot gold rose to $418.00/8.50 from the previous close at $415.35/85. London's afternoon fix was at $418.50. May silver rose 10.3 cents to $8.22 an ounce, trading from $8.105 to $8.275. Spot silver closed at $8.19/21, up from $8.10/12.
The London fix was at $8.14. Nymex July platinum fell $7.20 to $876.80 an ounce. Spot fetched $880/885.
June palladium went up $5.70 to $315.65. Spot palladium fetched $310.00/315.00.
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