Gold moved back up to unchanged levels in Europe on Thursday afternoon, having earlier flirted with a one-month low around $421 an ounce, helped by a weaker dollar later in the day, traders said. Spot gold was at $423.70/424.40 per troy ounce by 1440 GMT, barely changed from $423.80/424.50 late in New York on Wednesday.
Traders had mixed opinions on the market's next direction, with some taking heart that bullion had held above $421 four times in the past 10 days, while others felt the time was ripe for a correction.
"I think it looks all right. I think gold held pretty well at the lower numbers so I'm feeling bullish," one dealer said.
He thought the precious metal would initially target $429.
But others were less optimistic and said bullion, which hit a 16-1/2-year peak last December at $456.75, was vulnerable to a deep fall if it broke below the $421 level.
"The weight of opinion in the market is bearish so, if the price breaks, it could move down quite swiftly," Peter Hillyard, head of European metal sales at ANZ bank said.
"Some say the market may go down to $412/13/14 and hold there," he added.
Moves in the dollar continued to steer gold, which was boosted by a dip in the US currency following a mixed batch of US data.
A weaker dollar makes dollar-priced gold cheaper for non-US investors. The euro was last at $1.2106.
The US government reported on Wednesday the trade gap in May narrowed to $55.35 billion, lower than the forecast for a $57 billion shortfall, easing concerns about US external financing problems.
Gold's rally over the past three years was partly due to the huge US trade gap, which pushed the dollar into a 30 percent decline against the euro by the end of last year. This year, rising interest rates have capped gold while the dollar has firmed.
On Thursday, a US retail sales report suggested strong spending continued to drive the economy, but the dollar subsequently fell after digesting a benign reading on the US consumer price index.
Silver followed gold's lead and moved back up to $7.02/7.05, having earlier slipped below $7.00 and versus $7.01/7.04 in New York.
Platinum dipped to $865.00/869.00 from $871.00/875.00 previously, but the market was still well away from a six-week low of $855 hit last week.
Palladium was at $181.00/184.00 from $181.00/185.00 previously.
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