(Corrects name of Fed rate setter Michael Moskow)
LONDON (AFX) - Gold was under pressure, reversing yesterday's modest gains, as the dollar steadied at 7 week highs against the euro ahead of the release of a speech later today by Fed rate setter Michael Moskow.
At 1.30 pm, spot gold, which earlier hit a low of 610.00 usd an ounce, was quoted at 612.50 usd, down from the 613.40 usd level seen at the time of the COMEX market close in New York yesterday.
The dollar, which has enjoyed a solid start to the year, remained steady against the euro today amid speculation Moskow will reiterate concerns about inflation later today.
Gold often trades counter to the US dollar because it is seen as an alternative investment to the US currency. Also, a weaker dollar makes gold, which is traded in dollars, cheaper for holders of other currencies.
'Gold's ability to hold above 600 usd over the past couple of days has improved the metals technical outlook, with the metal now in the process of establishing a base at 605 usd,' said TheBullionDesk.com analyst James Moore.
He added, however, that in the short term sentiment is likely to remain extremely volatile, with the metal still at risk to bouts of dollar or oil led liquidation.
Oil prices have lost some 9 pct of their value this year as continued mild temperatures in the US reduce demand for heating fuels. The falls have pressured gold, reducing its appeal as a hedge against oil-induced inflation.
Taking a longer term view, however, Moore said 'sentiment (in gold) remains firmly bullish, with the current dip potentially offering investors an entry point'.
UBS Investment Bank analyst John Reade concurred, noting that since Friday's abrupt sell off in gold following stronger than expected US jobs data, he has noted strong physical demand for gold from India.
'This is the first time we have seen strong physical demand for gold above 600 usd an ounce and based on the experience of the past two years strong physical demand for gold has been a useful indicator that investors should consider buying gold here,' he said.
In other precious metals, silver was down at 12.11 usd an ounce against 12.51 usd at the close yesterday, platinum was up at 1,137.00 usd against 1,123.00 usd while palladium rose to 330.50 usd against 328.00 usd. maytaal.angel@afxnews.com ma/ro COPYRIGHT Copyright AFX News Limited 2006. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited