US gold edged up in choppy trading early on Thursday after the dollar weakened on a report which showed tamed US inflation. But traders expected the market to remain fickle and gold to move in a wide range in the near future.
"There was a big bullish sentiment in the last few days here in the metals. We had a big undertaking yesterday," a floor trader said. "The dollar gave back a little bit of its strength."
December gold at the COMEX division of the New York Mercantile Exchange was up as much as $5.20 at $629 an ounce in early trade after the US government said consumer prices fell by a greater-than-expected 0.5 percent in October.
But gold pared its gain and was up only $2.2 at $625.9 at 10:37 am EST (1537 GMT) after the greenback reversed its course and was trading a touch firmer against the euro. Sources cited short covering and dollar-related profit taking for gold's back-and-forth trading.
"The market is just volatile. I don't think people are willing to take great risk positions right now," said Bruce Dunn, a senior trader at Auramet Trading. Dunn expected gold to find support at the $620 level due to physical buying, and to trade up in the $640 to $650 range.
"People continue to think that the dollar will weaken, so that should add to gold stability," he added. Spot gold bullion was quoted at $624.00/4.75, up from Thursday's close at $623.70/4.35. Bullion dealers fixed London's afternoon spot reference price at $624.75.
COMEX December silver rose 11.5 cents to $13.06 an ounce. It traded between $12.885 and $13.17. Spot silver rose to $13.02/3.09 from $12.88/2.95. Thursday's fix was at $12.94. NYMEX January platinum went up $18.2 to $1,189.0. Spot platinum fetched $1,188.00/92.00 an ounce. December palladium was up $2.70 to $321.50 an ounce. Spot palladium traded at $318/323 an ounce.
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