Gold was steadier in Europe on Monday above $420 an ounce after bouncing from six-week lows below $418 on Friday, with opinions split on whether the market was set to rally further this week. Spot gold ended European trade at $421.40/422.10, up slightly from $421.10/421.80 quoted late in New York on Friday.
"I think sentiment has changed and we have now seen the short-term low in place, I am now looking for the $428 area by the end of the week," a dealer in London said.
Another said the current recovery might be brief as further pressure was seen stemming from expectations of dollar strength.
On Friday prices dropped to a six-week low $417.90 on a weaker euro, before a late short-covering rally in New York.
The dollar was on the back foot against the euro on Monday, making gold cheaper for non-US buyers, after a capital inflows report showed selling of US equities by foreigners in May, suggesting uneven interest in dollar-denominated assets.
The dollar hit record lows against the euro late last year, as gold soared to a 16-1/2-year peak at $456.75, due to concerns that the United States might find it hard to bring in the cash needed to offset outflows in its current account.
Despite the dollar's relative strength so far this year, 30 gold market analysts and senior traders polled by Reuters said that the market was set to extend its gains into 2006 as they expected dollar weakness to resume.
For now, Heraeus head of marketing and sales Wolfgang Wrzesniok-Rossbach said in a daily report that he was sceptical whether gold would soon be able to break out of the current range between $415 and $428.
"Just in case there is an unexpected break: the next support level is found already at $413 and more resistance lies between $435 and $437," he said.
Silver was nudging against $7.00 an ounce but was seen constrained and range-bound.
Spot silver was at $6.98/7.01 by 1515 GMT from $6.95/6.98 in New York on Friday.
Platinum was slightly firmer at $865.00/870.00 from $862.00/867.00 previously.
Palladium stood at $183.00/188.00 from $180.00/184.00.
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