LONDON, April 15 - Gold dipped during routine European trading on Tuesday as the dollar stabilised and as the war in Iraq continued to wind down, although prices remained in a $320/330 technical band. "The dollar and, in turn, the war in Iraq still remain the driving factors behind gold for the moment, and the yellow metal climbed to $326.50 before slipping back to $323.75 in response to the greenback's climb," analyst James Moore at TheBullionDesk.com said. "Gold is still under pressure. At the moment it seems there are people interested in puts (options) at $320," said William Leung, dealer at Standard Bank London in Hong Kong. "At the same time the market is still long, but there will be more long liquidations," Leung said. The United States and Britain headed into talks on Tuesday on how to rule the country now that Saddam Hussein has gone.
With the main fighting over in Iraq, Washington turned up the heat on Syria. U.S. Defense Secretary Donald Rumsfeld accused Damascus of testing chemical weapons within the last 12 to 15 months and of harbouring Saddam's top associates. Secretary of State Colin Powell warned of possible diplomatic or economic sanctions. Syria denied the U.S. charges, while U.N. Secretary-General Kofi Annan expressed concern that the U.S. approach could further destabilise an already shaky Middle East.
"Gold is likely to trade around $325 as some form of normality returns to Iraq, while the geo-economic scene is going to become more prolific in determining gold's long term direction," Moore added. Technically, the market has settled into a sideways trading pattern, with additional support on the downside expected from physical interest that has kicked in recently around $318.00 "Expect scale down support from $324.00/324.40 to $322.50 over the coming sessions, however, a break below would suggest a re-test of $319.50. On the upside expect further resistance from the recent high of $328.25/328.65 scale up to the 200 day moving average at $329.40," broker ScotiaMocatta said in a daily report. Spot was indicated at $323.50/324.25 an ounce at 1130 GMT, down from the New York close of $324.30/325.05.//