NEW YORK, March 26 (Reuters) - Range-bound COMEX gold was firm early Wednesday, with the focus split between buying gold as war insurance and waiting for April options on futures to expire at the end of the day, dealers said
"It's options expiration today," said a floor broker. "That's being overshadowed by the war, so I don't see anything much happening there."
Dealers reported choppy two-way business, with trade buying supporting the market right after the Commerce Department reported February durable goods orders fell 1.2 percent, in line with expectations.
April gold at 0935 EST was up $2.30 at $330.70 an ounce, trading from $328.30 to $331.40.
The market was glued close to the $330 options strike price, which held significant open interest.
Another floor broker said $330 is "the big key. So we'll see what happens tomorrow."
He added, "If we get under $329.50-$329.30, somewhere in that area, I think we're going to head a lot lower," targeting $320.
April gold was in the middle of rollover period as speculators protected long positions from physical delivery before first notice day on Monday.
Many funds liquidated during last week's drop in gold prices below $330, and the market is watching to see how many of the remaining longs would switch into next active June.
Spot gold was at $330.15/0.90, up from $328.25/9.00 at Tuesday's close. London dealers fixed the morning spot reference price at $329.60 an ounce.
The U.S. military said Wednesday its seven-day air and land assault on Iraq was on plan to overthrow President Saddam Hussein and rid Iraq of illegal weapons of mass destruction.
At the same time, up to 15 people were killed in a poor Baghdad neighborhood on Wednesday in what enraged residents said was a missile strike during intensified air raids on the capital.
Fears of a quagmire for U.S.-led armed forces in Iraq kept the dollar and U.S. stock markets under pressure, keeping safe-haven interest in gold alive after the recent collapse in prices for the yellow metal.
Futures rose to a 6-1/2 year high on Feb 5 at $390.80 an ounce before profit-taking kicked in. Gold hit a 3-1/2 month low on Friday at $325.80 following a "buy the rumor sell the news" script during the long run-up to last week's invasion.
May silver was up 0.7 cent at $4.40 an ounce, trading from $4.38 to $4.41. Spot silver was at $4.39/41, up from $4.38/40 late Tuesday and the fix at $4.38.
NYMEX April platinum was up $3.70 at $639.00 an ounce. Spot platinum was at $643.00/648.00 an ounce.
June palladium was down $8.20 at $197.00 an ounce, hovering above the contract low of $191 set Tuesday.
Spot palladium was was near Tuesday's 5-1/4 year low, trading at $191.00/196.00 an ounce.
Palladium prices, which have lost 50 percent of their value over the last year, will remain depressed for some time to come, hit by oversupply and low demand from car manufacturers, analysts said on Wednesday.
The precious metal is used mainly to clean car exhaust emissions but also in the dental and electronics sectors.