NEW YORK, Sept 30 (Reuters) - COMEX gold rallied back toward last week's 7-year high on Tuesday, as displeasing economic data drove investors out of Wall Street stocks and the dollar, then cut gains as U.S. assets steadied.
Surprisingly weak reports on Midwest manufacturing and U.S. consumer confidence knocked the greenback to its lowest level in almost 3 years against the yen and more than 3 months on the euro Tuesday, making dollar-priced bullion more affordable overseas and raising its profile as an alternative currency.
"Gold didn't do as much as the dollar did," said a bullion trader. "We didn't make any new highs or anything. I thought gold was just standing back while everything else was in turmoil."
COMEX December gold ended up $2.90 at $386.10 an ounce, trading from $382.80 to $389.40. Estimated volume was 43,000 contracts.
The contract hit $394.80 on Thursday, before fund liquidation knocked it down to the $380 psychological support area at week's end.
Bullion hit its highest price since May 1996 at $393.30 last week. Dealers last quoted spot gold at $384.80/5.50 Tuesday, up from $381.90/2.60 late Monday. In London they fixed the afternoon reference price at $388.00.
The euro rose to $1.1737, its highest price since June 19, while dollar/yen fell to 110.12, a 33-month low after the September consumer sentiment report and the Chicago Purchasing Managers Index disappointed traders awaiting confirmation of economic recovery.
"Financial concerns remain the chief driver in the market while currency movements (which of course are not unrelated to financial worries) are helping to dictate short term moves," wrote Rhona O'Connell, market research director at the World Gold Council.
Dealers said end-of-quarter position squaring worked both ways. Mostly funds aimed to mark their gold positions to market at the most advantageous rates.
December silver rose 6.7 cents to $5.142 an ounce, trading from $5.08 to $5.19, where it stalled some 20 cents below Thursday's 3-year high at $5.395.
Spot silver rose to $5.10/12 from $5.05/07 at the previous close. The fix was at $5.115.
NYMEX January platinum went up $3.70 to $699.40 an ounce. Spot platinum was last quoted at $704.00/709.00.
December palladium rose $6.55 to $215.15. Spot was indicated at $209.50/215.50.