NEWS / Government Ministries

Gold steady after NY gains; eyes dollar, N.Korea

SINGAPORE - Gold held steady above $570 an ounce on Wednesday, with dealers noting some safe-haven buying sparked by concerns over an expected North Korean missile launch.

Seoul, Washington and Tokyo have said there is evidence North Korea may conduct a test-launch of a long-range missile, which the three have said would present a grave danger to regional security.

Spot gold hit a high of $578.75 an ounce before easing to $577.00/577.75, up slightly from $576.20/577.20 in New York, when it rose 1.3 percent on a weaker dollar and tensions about Pyongyang's possible plans to test-launch the long-range missile.

Gold can be bought as a hedge against inflation and for future sale in times of trouble.

"This latest episode of tension between North Korea and the U.S. will undoubtedly add support to gold for the time being," said N M Rothschild in a daily report.

"However, with gold taking direction from moves in the dollar, oil and geopolitical developments, market participants remain extremely cautious in their views," it said.

N M Rothschild pegged key support at $540 an ounce and resistance at $585.

The United States has activated its ground-based interceptor missile-defense system, saying it would be a provocation if North Korea launched the missile, which some experts said could reach Alaska.

Pentagon officials declined to say whether they would try to shoot down any missile launched by the reclusive Communist state, but other U.S. officials have said that is unlikely, assuming the launch is aimed at open water.

Tensions in the Middle East, record-high oil prices and uncertainty in the dollar's outlook propelled the price of gold to a 26-year high of $730 in mid-May, but a brutal sell-off later forced market players to readjust their positions.

Tokyo gold futures tracked gains in New York's COMEX market. The benchmark April 2007 gold contract on the Tokyo Commodity Exchange rose 11 yen per gram to 2,146 yen.

The yen extended gains against the dollar after the Bank of Japan chief signalled that Japanese interest rates are on course to rise for the first time in six years, possibly as early as July.

The dollar edged down to 114.62 yen from around 114.95 yen in late U.S. trade. The euro inched up to $1.2613

Platinum rose to $1,168/1,175 an ounce from $1,155/1,161 late in New York. Sister metal palladium also rose to $297/303 an ounce from $296/300.

Silver edged up to $10.25/10.35 an ounce from $10.24/10.34.

Precious Metals Prices by 0148 GMT*

Gold 577.00 2.75 +0.48

Platinum 1168.00 13.00 +1.13

Palladium 297.00 -2.00 -0.67

Silver 10.25 0.01 +0.10

Change in 2006

Metal Latest bid End prev year Pct Move

Gold 577.00 517.20 +11.56

Platinum 1168.00 968.00 +20.66

Palladium 297.00 254.00 +16.93

Silver 10.25 8.81 +16.35

* The closing prices used to calculate the net change may differ from New York's last quoted prices.