Gold rebounded on Monday after an early drop spurred buying from jewellers in Asia, but further gains could be limited by a rally in the US dollar amid persistent eurozone debt concerns. Investors also closely watched an escalating tension in the Korean peninsula, although dealers said there were no signs of buying related to the crisis sparked by North Korea's artillery attack on a South Korean island.
Spot gold added 73 cents to $1,362.46 an ounce by 0628 GMT, having hit an intraday low at around $1,353 - not far from a low around $1,350 seen last week. Bullion was below a lifetime high around $1,424 struck in early November. According to a Reuters market analyst, Wang Tao, spot gold may extend its fall towards $1,329.45 per ounce as a big downward wave "C" is progressing.
"For today, I would look at support for gold at about $1,350. However, I think if we see a breach of this level, then we could see gold retreating further," said Ong Yi Ling, investment analyst at Phillip Futures in Singapore. "For the week ahead, I will also expect gold prices to pare some of its gains that was accumulated earlier last week. Currently the gold and the dollar is having a pretty strong inverse relationship."
US gold futures hardly moved at $1,362.1 an ounce. "The dollar is so strong, but we see buying on the physical side when trading started in Asia. That helps the market a bit. Some Chinese guys may be buying a bit," a dealer in Hong Kong said. Silver also bounced on firmer gold while platinum palladium barely moved. The world's largest silver-backed exchange-traded fund, iShares Silver Trust , said its holdings slipped to 10,711.23 tonnes by November 26 from an all-time high of 10,893.68 tonnes by November 23.