Gold prices drifted higher on Tuesday, after slipping about 1.5 percent in Asian trade, as dollar weakness encouraged investors to add positions.

But the near-term outlook was bearish and the metal was seen hovering in a broad range, taking direction from moves in the dollar and oil and from geopolitical developments, dealers said.

"The market appears to be trying to consolidate and finding a base around current levels. The mood remains very cautious and uncertain," said Yingxi Yu, metals analyst at Barclays Capital.

"We are still quite positive over the medium term because of macro-economic and currency factors, but over the near term it might be advisable to wait for further corrections before coming back as buyers again."

Spot gold (XAU=) hit a low of $560.50 an ounce in Asia before rebounding as high as $572.00. It was quoted at $570.25/571.25 by 0921 GMT, against $568.80/569.50 late in New York on Monday.

Gold had support from a drop in the dollar against the yen and the euro after comments by Bank of Japan Governor Toshihiko Fukui suggested the bank would lift interest rates.

A softer dollar makes gold cheaper for holders of other currencies and generally lifts demand.

Dealers also noted developments in North Korea.

The United States and Japan warned the country against a missile launch as officials said the secretive communist state appeared to have completed fuelling for a test flight that could possibly reach as far as Alaska. [ID:nSP223505]

"Geopolitical factors would likely provide long-term support, with softening tensions in Iran being countered by a resurgent North Korea in their nuclear ambitions," Standard Bank said in a report.

MINING SHARES MOVE

Mining shares in Australia and Hong Kong tracked earlier drops in bullion. Newcrest Mining (NCM.AX), Australia's top gold miner, shed 3.17 percent, Oxiana (OXR.AX) lost 3.55 percent, while Zijin Mining Group (2899.HK) dropped about 6 percent.

But European miners reversed earlier losses, with BHP Billiton (BLT.L) gaining 1.2 percent and Anglo American (AAL.L) adding 1.8 percent, shrugging off a slide in copper prices.

The physical gold market saw buying interest from jewellers and investors in Southeast Asia.

"We saw good buying when the price last fell below $550. I wouldn't say demand is fantastic right now but there's constant physical buying," said a dealer in Singapore.

In other precious metals, platinum (XPT=) rose to $1,157/1,163 an ounce from $1,138/1,144 late in New York.

"We forecast the platinum market will stay in deficit over our entire three-year forecast period," said John Reade, analyst at UBS Investment Bank, predicting prices at $1,150 after one month and at $1,200 three months from now.

Palladium (XPD=) rose to $294/299 an ounce from $290/295, while silver (XAG=) was at $10.03/10.13 an ounce from $9.97/10.07.