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COMEX gold bounces after sell-off, ends near highs

NEW YORK, March 30 (Reuters) - COMEX gold futures shot higher on Tuesday as traders looked to the market as a safe-haven alternative in the face of dollar weakness and heightened geopolitical tensions, dealers and analysts said.

Speculative selling that had weighed gold down on Monday had dried up, traders said, while news of British police arresting eight men and seizing a cache of explosives in an anti-terror sweep sparked new buying and short covering.

"Those who were shorting gold yesterday gave up quickly given that funds were still defending their huge (long) positions," Refco analyst Tom Boustead said. "Add into that the terrorist threat in the UK and that helped trigger some short covering on the COMEX to give it some lift."

Active June gold settled at $422.80, up $4.60, after trading $417.70 to $423.40. However, prices held below Friday's 10-week peak at $425 and still were off January's 15-year high near $430 an ounce.

Futures fell on Monday, pressured by U.S. market data showing a burdensome 40,000-lot increase in the fund long position that traders worried could spark heavy liquidation.

But gold gained early as the dollar fell after a report showing a decline in U.S. consumer confidence, with rising oil prices also pulling some investors into precious metals, traders said.

A softer greenback typically promotes buying in dollar-denominated gold from traders using foreign currencies as the metal becomes cheaper in relative terms.

The dollar slipped after the Conference Board's U.S. consumer confidence index fell to 88.3 in March from an upwardly revised 88.5 in February. Economists expected it to fall to 86.5 this month.

Analysts said they expect tentative action in gold ahead of a raft of economic data this week, notably Wednesday's OPEC meeting on oil production, Thursday's European Central Bank interest rate decision and Friday's U.S. jobs data.

Resistance in COMEX June gold was seen at $430 an ounce, with support hovering at $416 and then at $414.50.

Wednesday is first notice day for the nearby April gold contract.

Spot gold rose to $421.30/1.80 from Monday's close at $416.50/7.25. London's afternoon fix was at $420.00.

Silver prices got a lift from galloping gold, traders said. May futures jumped 15.0 cents to $7.775 an ounce, holding off Friday's 16-year high of $7.81. Its session range was $7.61 to $7.795. Spot hit $7.74/76, versus $7.59/62 previously, while the fix was at $7.61.

Active July platinum climbed $7.50 to $888.40 an ounce. Spot was indicated up at $891.00/896.00.

June palladium rose 20 cents to $289.10 an ounce. Spot palladium traded at $280.50/286.50.