Gold eases in London

Gold prices eased on Tuesday as investors took profits from a two-week high, but traders said the metal had potential to gain on security worries and any further decline in the dollar.
A breach of important technical levels was also expected to accelerate the upward movement, but trading was likely to be subdued ahead of the US Independence Day holiday on Wednesday, when financial markets there will be closed.
Spot gold was quoted at $652.80/653.60 an ounce as of 3:09 pm EDT (1909 GMT), versus $656.70/658.20 in New York late on Monday, when it rose as high as $658.80, the highest since June 20.
Most-active gold for August delivery on the COMEX division of the New York Mercantile Exchange settled down $3.80 at $655.40 an ounce, after dealing in a tight range between $654 and $660.30. Jonathan Jossen, an independent trader in New York, said from the COMEX floor that fund and trade buying with good volume was evident in the pit.
He said institutional buyers should boost gold in the beginning of the third quarter because of the precious metal's lacklustre gains in the first half of this year. "If gold is still in favour, the funds will come back in the first few days of the quarter," Jossen said. Spot bullion ended the first half of the year up only 2 percent. It hit a 2007 high of $691.10 an ounce on April 20, but prices have declined since then.
A possible al Qaeda plot to detonate car bombs in London and Scotland spurred flight-to-safety buying of gold on Monday, which, coupled with a lower dollar, had helped lift bullion. "Monday's price action gave more support to our view that the recent low of $640 should mark a pretty solid base in the near term," said John Reade, head of metals strategy at UBS Investment Bank.
The dollar rebounded on Tuesday, but still hovered near a record low against the euro, after falling to within half a cent of a record low against the common European currency on Monday.
A weak greenback makes gold, which is denominated in US dollars, cheaper for holders of foreign currencies. Concerns about the US subprime mortgage market, intensified by troubles at two Bear Stearns-managed hedge funds, have dented risk appetite. Recent soft reports on consumer price inflation, personal income and spending also weighed on the dollar.
"In the very short term, there is a slight bias on the upside, but prices would probably dip in the lower-demand months of July and August and pick up in September." said Suki Cooper, precious metals analyst at Barclays Capital. "The geopolitical environment ... could potentially spark prices higher."
In other metals, platinum was at $1,280/1,284 an ounce, after rising to a one-week high of $1,288, against its previous finish of $1,278/1,282 in New York, while silver eased to $12.55/12.60 from $12.63/12.68 an ounce late in the US market on Monday. Palladium was down slightly at $364/368 from its Monday's close of $366/370.