Gold rose on Thursday after the US dollar eased on expectations the Federal Reserve would hold interest rates steady, but declines in crude oil capped gains.
Sliver rode on gold's gains with added support from strong base metals, which strengthened its dual precious and industrial metal profile. Silver has rebounded as much as 5.8 percent since falling to it's lowest in nearly two weeks at $11.70 an ounce on Monday.
Spot gold rose to $629.40/630.20 an ounce from $627.00/627.80 late in New York on Wednesday, when it gained more than $3 an ounce after tame US inflation readings hit the dollar. US crude oil futures fell to their lowest level in nearly eight weeks, extending losses for a fourth straight session towards $71 as a drop in US oil stocks was in line with forecasts.
"It looks like we are in a range for a while. At $632 to $634, there seems to be some resistance there. On the downside, $620 to $623 will be the support," said Ronald Lunge, director of Lee Cheong Gold Dealers in Hong Kong.
"The dollar weakness versus a drop in oil create a tug-of-war in the market," said. Lunge said silver had attracted new buying since it dropped from a 25-year high of $15.17 an ounce in May, adding that recent mining strikes have also supported the metal which is mainly used in jewellery, photography and electronics.
Silver edged up to $12.26/12.36 an ounce from $12.25/12.35 late in New York. In Japan, key June Tokyo Commodity Exchange gold drifted down to a session low of 2,358 yen a gram after edging up slightly in trade, but it was mostly rangebound with no fresh trading factors.
"The short-term trend for gold is bearish as there is very little reason to take fresh positions from here," said Shoji Sugata, assistant manager at Mitsubishi Corp Futures and Securities Ltd.
"This is typical trading in summer when many people in the market are on holiday.
We'll see a clearer trend when players return," Sugata said. The dollar was at 115.65 yen, hovering near the session low of 115.57 yen. The euro inched up to $1.2855 from $1.2840 in late US trade.
US core consumer prices in July, stripping out volatile food and energy costs, rose 0.2 percent, breaking a four-month string of 0.3 percent increases and confounding economists' expectations of another 0.3 percent rise this time.
The data followed on Tuesday's unexpectedly benign producer price figures and fed speculation that inflation risks were subsiding, which could prompt the Fed to keep interest rates on hold next month.
The Fed left rates on hold at 5.25 percent last week after pushing them up 17 straight times since June 2004, though it left the door open for more credit tightening if price pressures persist.
The physical sector had seen buying interest from gold jewellery makers at below $630 an ounce this week, but some dealers said the metal could fall again with the end of violence between Israel and Hizbollah guerrillas.
"There was some physical buying yesterday but buyers go into hiding now because the price is picking up. Premium is unchanged because I still can't see good demand to justify an increase," said a dealer in Singapore.
Premiums for gold bars were quoted at zero to the spot London price. Platinum fell to $1,323/1,238 an ounce from $1,238/1,243 late in New York. Sister metal palladium rose to $334/338 an ounce from $331/335.