Yellow metal rebounces to $650

Gold bounced back and held above $650 ounce on Thursday with the help of firm oil, but the metal looked vulnerable after several failed attempts to breach key resistance around $660 an ounce.

Sales of gold scrap from Indonesia and Thailand dominated the physical sector in Southeast Asia, though dealers also noted some buying interest from India, the world's largest consumer.

In other precious metals, platinum fell after jumping to a 10-week high of $1,200 on Wednesday on speculative buying as well as purchases by Chinese jewellers ahead of the Lunar New Year later this month.

Spot gold rose to $652.70/653.40 an ounce from $651.70/652.40 an ounce late in the US market on Wednesday, when it dropped more than $1 after crude oil reversed gains.

"The market remains choppy with gold unable to break out of recent ranges," Investec Australia said in a report.

"A concerted break above $660 may open the door for further buying, but in the absence of any break then gold looks vulnerable in the short term to move back below the $650 level," it said.

Gold rallied to a six-month high of around $661 an ounce last week but attempts to revisit the level were met by profit taking, in which jewellers and speculators cashed in their holdings.

Dealers said gold would have to crack $660 to reach new highs around $670 and $680, with the help of either a weaker dollar or firmer oil. Oil rebounded to $58 a barrel after fuel stocks in the United States were cut by freezing weather and as buyers re-emerged following a 2 percent drop the previous day.

"I think the market has lost direction right now," said Louis Lok, a dealer at Bank of China in Hong Kong, adding that gold would be stuck in the $646 to $660 range while waiting for new leads.

But gold was likely to find support at lower levels, with physical buyers from mainland China and other parts of Asia keen to buy the metal on a price dip, said Lok.

Premiums for gold bars were unchanged at 30 U.S. cents an ounce to the spot London price in Singapore.

"We mainly deal with scrap this week but sales from Thailand have slowed down a bit. I would say physical demand is mainly from India," said a dealer in Singapore.