Gold defied a firming dollar and held steady in Asian trade on Monday, driven by a technical rebound after heavy liquidation in New York and hopes of safe-haven buying during this week's US Republican Convention.
"We had a fairly interesting sell-off on Friday, when the market went down to $401 an ounce. I think for today, $402 will be the downside," said an analyst in Sydney, who pegged upside targets at $405 and $406 an ounce for this week.
Spot gold was trading at $404.50/405.25 after touching a high of $404.75 an ounce. That compared with $402.85/403.60 in New York on Friday, when gold fell nearly $4 an ounce as the dollar strengthened against other currencies.
There will be no trading in London on Monday due to a public holiday.
The almost simultaneous crashes of two Russian passenger planes last week had raised gold's safe-haven appeal.
Fears that terrorists may seek to disrupt this week's Republican Convention could also lend support for the yellow metal, dealers said. Worries that New York would become a chaotic mix of convention delegates, peace protesters and police was also prompting many whom work in financial markets to go elsewhere.
New York is seen as a potential target for an attack by al Qaeda, which has vowed to disrupt the November US presidential election.
The euro hovered at three-week lows around $1.2001.
A strong dollar traditionally makes dollar-denominated gold less attractive for holders of other currencies. Currency traders were also keeping an eye on the convention. "Obviously everybody expects that this type of event would have an impact on gold.
You will get some people trading around that but I don't believe the gold market is being supported by expectations of an event of terrorism," said another Hong Kong dealer.
The dealer said the dollar's upturned was limited because the market had priced in that the US economy would rebound.
News that Sons of Goalie Ltd, one of Australia's oldest mining houses, was facing bankruptcy after discovering its mines might not have enough gold to pay back loans had little impact on the market.
Sons of Goalie moved into voluntary financial administration, underscoring the gamble of hedging contracts that allowed it to sell gold not yet mined for a fixed price.
Platinum fell to $858/863 an ounce, from $862/867 last quoted in the US market. Sister metal palladium rose to $213/218 an ounce from $209.50/215.50. Silver was at $6.58/6.60 an ounce, versus $6.55/6.58 in New York. In Tokyo, benchmark August gold futures contract added one yen per gram to 1,436 yen per gram.
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