NEW YORK, Dec 26 (Reuters) - COMEX gold futures firmed Thursday morning on a weakened U.S. dollar, but prices held to a tight range in a holiday-thinned market, dealers said.
As tensions over the threat of U.S. confrontation with Iraq and North Korea simmer in the background, trade in the safe-haven metal was quiet, due to Christmas holiday closures until Friday in European, Hong Kong and Australian markets.
"You probably have a little support from the lower dollar, but there are a bunch of traders who are still out for the holiday week, so I suspect we really shouldn't be doing too much today," said a floor trader here.
February gold gained 20 cents to $347.50 an ounce by 0932 EST, trading $344.80 to $347.70 as it consolidated under last week's near six-year high at $355.70.
Spot gold was barely traded after earlier ticking up in Tokyo on a bid by a Japanese trade house. It last fetched $346.85/7.55, up from $345.00/60 late Tuesday before the market took a break Wednesday for Christmas.
Trading was thin as traders kept to the sidelines. The first Christmas snowstorm in the New York metropolitan area in more than 33 years on Wednesday kept some players out of the market, traders said.
"Support in February gold is under $340 and resistance is above $352, but I don't see gold reaching any of those levels either today or tomorrow," said a COMEX source.
"There is spot trading upstairs, but it is very, very quiet," he added.
The dollar was lower after slipping to a three-year low against the euro at $1.0363 per euro and a four-year low against the Swiss franc at 1.4013 francs in quiet Asian trade as investors continued to pare U.S. holdings on geopolitical concerns.
A weaker dollar versus foreign currencies makes dollar-denominated gold cheaper in relative terms for overseas buyers.
Jitters about the standoff with Iraq over its alleged stockpiles of chemical, biological and nuclear arms were compounded by North Korea's announcement Sunday that it was reactivating a nuclear reactor suspected of being part of a weapons program and closed in 1994.
Gold, seen as a form of portfolio insurance in troubled times, is up about 26 percent in 2002 with one week left -- one of the best performing financial assets in a year marked by international tension, recession fears, corporate malfeasance and talk of deflation.
U.S. equities rose, with the Dow Jones 30 up 53 points at 8,500 as sharply lower U.S. weekly jobless claims soothed investors' worries over a sluggish economy, a potential war with Iraq, and high energy prices.
In other precious metals, COMEX March silver rose 1.3 cents to $4.675 an ounce, in a $4.645 to $4.68 range. Spot silver was at $4.65/67, up from its last New York close Tuesday at $4.64/66.
NYMEX January platinum rose $4 to $589 an ounce. Spot platinum hit $588/593.
March palladium fell $7 to $228 an ounce, near its contract low of $224. Spot palladium was at $224/234.