European gold pares gain after jumping three percent

Gold surged on Friday on bargain hunting after this week's fall to a three-month low and on oil's late rise to $70, although a firmer dollar in the US afternoon may have capped gains.
Gold rose as high as $585.00 an ounce before easing to $578.00/578.70 late in New York, still up nearly 2 percent, against $566.50/7.50 on Thursday, when it jumped as much as 3 percent.
Analysts said gold remained under threat and may slip, as people were not yet convinced the recent downtrend is over.
"Gold must prove its case at levels above $585 (an ounce), and above $640, to provide confidence of the type that is required to resume its bull run," Jon Nadler, an analyst with bullion dealer Kitco, wrote in a note.
"If the negative bias re-emerges, and does so with the swiftness and energy it recently exhibited, then the price compass will inevitably point to a range of from $490 to $540," he said.
Gold rebounded as a recovery in global share prices lifted confidence of investors, who earlier in the week exited commodities to avoid risks.
European shares reversed their gains after China's central bank said it would raise its reserve requirements and the US current account deficit narrowed more than expected.
But traders said there was no impact of China news on precious metal prices.
"Overall, I see precious metals to remain vulnerable in the short-term. However, I don't expect it to test new lows since physical demand and bargain-hunting should provide some support," said another European dealer.
Gold came under some pressure in late US trade as the dollar, after falling earlier, steadied. But oil firming to $70 a barrel in New York helped offset the dollar's strength.
Gold is often viewed as an alternative investment to dollar and a hedge against inflation.
"It's (gold) vulnerable to any deterioration in sentiment towards global asset markets. The world does look a calmer and happier place, but that could change very quickly," John Reade, analyst at UBS Investment Bank, said.
In other precious metals, silver advanced as high as $10.35 an ounce before moving to $10.13/10.23, compared with $10.00/10.10 previously.
Platinum fell to $1,147/1,155 an ounce from $1,160/1,170, while palladium rose to $300/305, compared with $295/$300.