European gold firmer

Gold prices firmed on Tuesday after the dollar fell on news of a sharp fall in US Midwest business activity, which analysts said reinforced the recent trend of much slower economic growth.
Tha National Association of Purchasing Management-Chicago said its business barometer fell to 53.5 in October from 62.1 in September. Economists had forecast the index at 58.0.
Spot gold was quoted at $603.60/604.60 an ounce by 1645 GMT, below the $606.30 seen after the data, but above the $604/605 an ounce seen late in New York on Monday, when it hit a seven-week high of $610.50 an ounce. Gold sentiment earlier on Tuesday had been dampened by oil prices holding below $60 a barrel.
"The dollar fell and gold went up after the Chicago PMI data," said James Steele, analyst at HSBC. Gold is used as a safe-haven investment in times of economic and political uncertainty or when price pressures or inflation expectations are rising, often because of rising oil prices.
Investors mostly shrugged off lower crude oil prices on Monday and bought gold on worries about slow growth in the United States and a weaker dollar. A break above key resistance in the $607-608 area added momentum to gold's rally.
"Yesterday's gold move was independent of oil prices ... (But) if oil prices continue weak, they will drag gold down," an analyst at a European bank said.
Analysts say gold sentiment over coming months will be more entwined with the fortunes of the dollar than with oil, where the relationship, although still strong, is waning.
"Short-term funds buying interest emerged near the lows (on Monday) and boosted the metal despite weakness in the energy complex, hinting at a possibility that the metal could be breaking its close link with crude oil," Standard Bank said.
Gold also will be supported by jewellery demand from emerging market countries, but for now some analysts think that interest has been sidelined on speculation that prices are more likely to fall than rise.
On the technical front, gold is holding above the key psychological $600 level, which traders say is a bullish signal. "If it can get through yesterday's high this week, then we are looking at numbers in the mid $650s," a trader said. Silver drew strength from gold's move higher, but seems to be hemmed in between $12.00 and $12.20 an ounce. It was last quoted at $12.10/12.17 an ounce down from $12.06/12.13 in New York on Monday, when it hit a 7-week high of $12.24. Platinum was down at $1,076/1,081 from $1,089/1,094 and palladium was softer at $317/320 from $324/329.