Gold was trapped in a $1 range in Asia on Monday as dealers waited for news out of Pakistan, where troops rounded up a group of Islamic militants and tribal allies possibly linked to al Qaeda.
"The market is looking up for news, whether it is from the Afghanistan-Pakistan border or the movement in the dollar," said Martin Mayne, associate director at N M Rothschild in Sydney.
The dollar, whose movements have driven gold in the past few months, could get a boost if key al Qaeda leaders were captured and weaken dollar-denominated gold's safe-haven appeal, dealers said.
Spot gold was quoted at $412.25/413.00 an ounce versus $411.75/412.50 in New York on Friday." It is in a limbo at the moment $407 should provide good support, while resistance is seen at $417," Mayne said.
Suspected al Qaeda fighters attacked a Pakistan army camp on Monday, just hours after the military called a cease-fire to let tribal elders negotiate the militants' surrender.
Pakistan had launched its biggest offensive, involving 5,000 troops, in its semi-autonomous tribal border lands last week to sweep foreign militants from the region and catch al Qaeda chief Osama bin Laden.
The Pakistani army as "conjecture" dismissed talk that al Qaeda number two Ayman-ul-Zawahri may be among those surrendered near the Afghan border on the weekend.
The Tokyo gold futures were firmer on Monday because of a weakening yen. The benchmark February 2005 gold contract on the Tokyo Commodity Exchange (TOCOM) rose four yen per gram to 1,424.
The contract had touched a low of 1,417 yen. "Sentiment is still strong. There's a technical rebound and a weakening yen also helps push up prices.
I put resistance at 1,450 yen," said one Tokyo dealer. The dollar was trading at 107.37 yen, up from 106.65 in late New York on Friday.
The euro was trading at $1.2246 versus $1.2281 in New York.
Silver fell victim to profit taking after touching a fresh six-year high of $7.62 last on Friday.
It was quoted at $7.52/7.54 an ounce, down from $7.54/7.57 last quoted in the US market.
Silver, which has some industrial uses in electronics and photography, has been supported by firm base metals prices but dealers said silver was overbought and economic fundamentals did not merit such high prices.
Platinum was quoted at $891/896 an ounce versus $890/895 in New York and sister metal palladium stood at $274/279 an ounce against $271/277.
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