NEW YORK, June 25 (Reuters) - COMEX gold fell at the open on strength in U.S. equity markets and a steady dollar, as all three markets reversed their recent trends, but traders said gold would not go down too far as Middle East tensions continue to simmer.
After U.S. economic data proved benign, with June consumer confidence slightly better than expected, U.S. share prices continued to firm and gold added to its losses.
"You had a little follow-through selling this morning in reaction to the equity trades last night (when they rallied in the afternoon)," said Jimmy Quinn, commodities commentator for AG Edwards.
"I think there's a reluctance to aggressively press the (gold) market lower, because of what's going on in the Middle East. I think if the dollar works better from here, you'll probably see gold drift from here," he added.
The dollar's recent losses have helped thrust gold up to its recent highs, as stronger European currencies provide an arbitrage advantage in the gold market to non-U.S. investors.
Tuesday's equity market improvement, however, helped regain some of its strength, and weighed on gold prices.
August gold was down $3.10 at $321.60 an ounce after the release of U.S. economic data, trading from $321.40 to $324.20.
Spot gold slipped to $322.10/2.60, off $323.55/4.05 at Monday's close. London's afternoon gold fix was lower at $321.70.
One trader said he thought the better-than-expected consumer confidence numbers would keep pressure on gold, as the equity market continued to improve on the data.
If gold can push back above $322.60, a chartist said gold could push higher in afternoon trade, based on arbitrage positions going into the close on Monday.
"If we get work back to that level, hold it, and work through it, you might get a little bit of short covering later in the session," he said.
The Federal Reserve's open market committee is meeting Tuesday in the first of a two-day session. Any results from the FOMC discussions will be released after Wednesday's gold market close. Few analysts believe the Fed will move interest rates at this particular meeting.
July silver fell in tandem with gold, dropping 2.7 cents to $4.845 an ounce. The early range ran from $4.83 to $4.865. Spot silver changed hands at $4.84/86, just under its $4.85/87 price late Monday. It was fixed at $4.85.
NYMEX September palladium firmed after Russia's Norilsk Nickel said it planned to sign, sometime in the third or fourth quarter, 3- to 5-year platinum and palladium supply deals with a number of the world's leading automotive companies.
A Norilsk executive said there would be more than one contract, but did not name the companies. He added, however, there are 10 companies in the world which produce catalytic converters, and Norilsk plans to sign them all.
September palladium fell 50 cents to $323.0 an ounce early, but after Norilsk's news it turned up $1 to $324.50, though only slightly higher than the contract low at $322 hit Monday. Spot palladium moved back to even at $319.50/$339.50 after dipping earlier to its lowest since Nov 16, 2001, at $318 bid.
July platinum was off $2.50 at $559.50 an ounce. Spot platinum was also $2.50 lower at $555.50/565.50 from late Monday prices.