Gold edges up after hitting three-week low in Asia

Gold fell to a three-week low on Tuesday before rebounding as fresh physical demand emerged to help bullion resist a stronger US dollar. Buying interest from investors and jewellers should prevent gold from falling below key support of $425, but some dealers said June's bullish trend might be over.
Spot gold was quoted at $426.50/$427.00 an ounce, down from $427.30/$428.00 an ounce last traded in London on Monday, but above a three-week low at $425.60 hit in Asian trading.
US markets were closed on Monday to mark the country's Independence Day holiday. "My expectation is that gold holds above $420 and possibly even $425.
It will try higher again this quarter when liquidation is over," said a dealer. "That said, I think it is the beginning of the end of this rally, as once currencies stabilise, the market will realise there is little or no reason to retain this underlying bullish bias," he said.
Gold rose to a three-month high at $443.60 an ounce on June 24 just a few dollars away from this year's high at $446.70 hit on March 11 but has since fallen victim to profit-taking and a rally in the US dollar.
Gold, which loosened its link with currencies in June, seems to be following euro/dollar movements again for direction, said dealers.
Gold fell nearly $10 on Friday, when the dollar rallied on the prospect of further US interest rate hikes. The euro stood around $1.1911 in Asia, having fallen below $1.19 in London and hitting its lowest level since late May at $1.1889.
A strong dollar makes gold more expensive for holders of other currencies. Bullion dealers said premiums for gold bars inched up to 20 US cents an ounce in Hong Kong, compared with zero last week due to some buying interest from investors.
Some dealers said fund managers could resume selling before gold stages a significant rebound. "The more they are going to liquidate, the healthier the market is," said Ronald Lunge, director of Lee Cheong Gold Dealers in Hong Kong.
"There seems to be support at $420, and in the coming month, we may be back to $440 again," he said.
Palladium rose to $172/$177 an ounce from $171/$175 in London, where it had fallen on fund selling to $165 an ounce, its lowest level since July 2003.
Platinum was trading at $871/$875 an ounce, versus $870/$874 last quoted in London. Silver firmed to $6.88/$6.91 an ounce from $6.84/$6.87.