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  Gold rebounded from
its lowest level in a week on Tuesday as bargain hunters and physical buyers
emerged, lifting the price of other precious metals.
Spot gold hit a low of $676,80 an ounce, just above key support of $675 an
ounce, before rebounding to $686,75/687,75 an ounce, up from $682,60/683,60
late in New York.
"A lot of people want to buy gold at very low prices, and now there's a
collapse, so everyone jumps into the market. They are all happy," said a
dealer in Singapore.
"Some of the purchases are physical-based," said the dealer,
referring to buying from investors and jewellery makers.
Gold, used in jewellery and investment, fell more than 4% in the US market on
Monday, when a broad financial market sell-off saw base metals, oil and
equities buckling under speculative selling from record highs.
Gold hit a 26-year high of $730,00 on Friday on fund buying as investors
diversified into precious metals on record-high oil prices, tensions in the Middle
East over Iran's nuclear ambitions and uncertainty over the dollar's outlook.
Some dealers said physical demand was limited, which suggested that buyers
were keen to see more price correction.
"It's human nature. People have seen a big correction. Are we going to see
more?" said Darren Heathcote, head of trading at N M Rothschild in Sydney.
"I think there's scope for gold to fall further yet," he said.
The benchmark gold futures contract on the Tokyo Commodity Exchange,
currently April 2007, fell by its daily 60-yen limit to 2 516 yen per gram as
sell-offs in London and New York ignited active follow-through
sales by Japanese investors.
"I think it's accepted that it's probably moved way ahead of
fundamentals in the recent last couple of weeks as far as gold is
concerned," said Heathcote.
"In the back of my mind, I seem to feel it has ... that strong bull run,
you know, getting ahead of itself," he said.
In other precious metals, platinum rose to $1 272/1 280 an ounce from $1
270/1 278 late in New York
but off last week's record high of $1 334 an ounce.
Refiner Johnson Matthey released its widely anticipated annual review on
Monday, saying the market was expected to register a deficit for the eighth
year in a row. Palladium rose to $367/374 from $363/369 in New York on Monday, when it had fallen to
its lowest in nearly three weeks at $352 an ounce on fund selling.
Silver fell to its lowest in nearly three weeks to $13,04 before rebounding
to $13,45/13,55. The metal was last quoted at $13,29/13,30 in New York.
Silver hit a 25-year peak of $15,17 last week.
The currency market could also offer leads to precious metals ahead of the
release of the US April Producer Price Index due at 12:30 GMT. Market players
are watching for clues on the Federal Reserve's next move on interest rates.
Economists in a Reuters survey forecast a median 0,8% rise compared with a
0,5% increase in March.
The dollar erased earlier gains as the covering of short positions eased and
investors looked to the data for clues about when the Fed will pause its
two-year run of interest rate rises.
The dollar was at 110,25 yen down from a session high around 110,90 yen and
110,50 yen in late US
trade on Monday. The US
currency hit an eight-month low of 109,31 yen hit late last week.
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