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COMEX gold rises as confidence hits Dow, US dollar

NEW YORK, July 30 (Reuters) - COMEX gold settled higher on Tuesday as mining company shares rose while the U.S. dollar and the stock market dipped after the release of weaker consumer confidence, traders said.

"We did have a bit of a bounce and tested the $305 resistance level (basis August), but failed," said Leonard Kaplan, president of Prospector Asset Management. "Today was rather quiet on the floor of the exchange with most people continuing rollover from (the) August to December (contract)," he added.

Traders said that, other than switching futures into forward months, the market moved on two external stimuli, which tend to help drive gold in the opposite direction from them -- the value of the dollar and activity in the stock market -- although rising gold stocks in the XAU index also helped.

Key December futures at the New York Mercantile Exchange rose $1.50 to $306 an ounce after ranging from $303.50 to $307.50. August gold rose $1.30 to $303.70 an ounce.

Spot bullion last traded at $304.10/4.60, still above Monday's New York close of $302.60/3.10 but off from Tuesday's afternoon fix in London at $305.40.

Shares in gold mining companies were higher after Goldman Sachs raised its rating on the sector and its gold price forecast.

The benchmark Philadelphia Stock Exchange index of gold miners was up 3.2 percent to $61.42 in mid-afternoon. Barrick Gold Corp. , the world's second-biggest producer, up 4.6 percent, and Placer Dome Inc. , Canada's second-largest gold miner, up 2.29 percent, led the way.

Goldman expects gold to sell at $310 an ounce in the second half of 2002 and for full-year 2003, up from a previous forecast of $300 an ounce. Analysts Daniel McConvey and Jim Copland also raised their rating on the gold sector to "market overweight" from "market weight."

Gold traders said prices were now carving out a range, with market bulls predicting it will move between $302 and $310 and bears saying a $295-$310 range should emerge if prices break below the psychological $300 mark.

Investment fund selling last week shoved gold to three- month lows, stalling a rally which had lifted it 2-1/2-year highs. Traders said it had been a mixture of long liquidation, hedging and investors raising cash to meet margin calls resulting from stock market losses.

At its peak in June, spot gold was selling at $330.30 an ounce, a 20 percent increase since the start of the year, while futures topped out at $331.50.

On Wall Street, stocks were lower after the Conference Board said its consumer confidence index tumbled to 97.1 in July from a revised 106.3 in June, with a continued slide in confidence seen possibly threatening U.S. economic recovery.

The Dow 30 fell 97 points at 8,615, and the Nasdaq Composite index shed 1,40 points to 1,333.

The dollar was in negative territory against most key currencies, which increases buying power for overseas consumers of gold, but it gained versus the Japanese yen .

COMEX September silver futures ended 1.8 cents higher at $4.658 an ounce, traded from $4.63-$4.695. Spot was at $4.64/66, up from its previous close at $4.62/4.64. The Tuesday fix was at $4.66.

NYMEX platinum group metals were a mixed bag, as palladium suffered from modest long liquidation, while sister-metal platinum wafted higher in thin volume, traders said.

"That's fund selling going on in palladium, a bit of a correction," said Ralph D'Esposito at RJ Futures.

September palladium futures shed $13.20 to $319.30 an ounce. Spot palladium traded at $315.30/327.30. Spot fixed in at $321 in the afternoon.

NYMEX October platinum closed $3.60 firmer at $523.20 an ounce. Spot last was at $526.20/534.20, just below its afternoon fix at $528.