Gold slips in Asia

Gold dipped in volatile trade on Tuesday after the dollar rose towards a six-month high against the euro but the metal could find support above $800 an ounce on bargain hunting, with jewellers also likely to buy on dips. Silver, platinum and palladium firmed but trading was slow ahead Tuesday's US housing and consumer confidence data and minutes from the Federal Reserve's last policy meeting that may offer clues on the direction of the economy and interest rates.
Gold slipped to $818.60/819.60 an ounce from $820.20/821.40 an ounce late in New York on Monday but off an intraday low of $817.70 an ounce. "Gold appears to have built a base above the $800 per ounce level and with demand for gold in India likely to pick up ahead of Diwali, the Hindu festival of lights in October, prices should remain buoyant," Investec Australia said in a report.
Gold was well below a lifetime high of $1,030.80 hit in March and dealers said jewellers were stocking up ahead of the festive seasons in Asia, especially in main consumer, India. "Physical metals are cheap, especially silver," said William Kwan, bullion director at Gold Capital Management in Singapore.
"I am looking at $807 as the support level for spot gold today. The upside is quite high at around $835 for a start and then followed by $850," he said. Oil was steady around $115 a barrel on concerns that tropical storm Gustav in the Caribbean coulddisrupt oil and natural gas output in the Gulf of Mexico as itmoves north-west.
The euro slipped to $1.4707, hovering near the six-month low of $1.4630 hit last week, as investors sought clues on whether the euro zone economy is hurting enough for a cut in interest rates. In theory, expensive oil lifts gold's appeal as a hedge against inflation. A stronger dollar reduces its appeal as an alternative investment to currencies but dealers said gold was likely to find support from physical buying.
India's gold markets were abuzz with pre-festival buying, with dealers reporting a shortage in supply. The festive season culminates in October with Diwali. "Physical buying remains firm going into the festive period and that may support gold. I guess we will still be trading in a range of $800 to $845," said a dealer in Singapore. Silver inched up to $13.40/13.46 an ounce from $13.37/13.43 an ounce late in New York. The metal, which normally tracks gold, tumbled to $12.39 in mid-August, its weakest since last September.
Spot platinum firmed to $1,425.00/1,445.00 an ounce from $1,420/1,440 late in New York. Spot palladium rose to $288.50/296.50 an ounce from $285.00/293.00 an ounce. The most active Tokyo gold contract for June 2009 delivery on the Tokyo Commodity Exchange fell 16 yen per gram to 2,900 yen. New York gold futures fell $2.4 an ounce to $823.30.