Gold and silver prices slipped Tuesday, despite a softening dollar and weak U.S. economic data.

The precious metals had rallied earlier in the day, as a dropping dollar and slowing economy usually buoy gold, which is regarded as a hedge against inflation. But profit-taking, the countdown to elections, and catch-up with oil prices, which fell more than $2 on Monday, took the wind out of metals' sails.

Most-active December gold settled 60 cents lower at $606.80 a troy ounce.

December silver settled 2 cents higher at $12.27 an ounce.

December gold peaked Tuesday at $609.30 an ounce. The rally was seen as the dollar headed south following the release of Chicago PMI data and U.S. consumer confidence, which came in below expectations. But the rally was short-lived as soft crude oil prices and firm resistance near the $616 level capped gold's momentum.

"Part of the moves are in relation to the dollar," said Larry Young, senior trader at Infinity Brokerage. "But the market as a whole and especially in metals won't see a break until the elections next week are over."

January platinum settled at $1,086.50 an ounce down $6.70.

December palladium settled $6.05 lower at $322.70 an ounce.

December copper contract slipped 1.30 cents to settle at $3.3455 per pound.

Gold prices firmed on Tuesday after the dollar fell on news of a sharp fall in U.S. Midwest business activity, which analysts said reinforced the recent trend of much slower economic growth.

The National Association of Purchasing Management-Chicago said its business barometer fell to 53.5 in October from 62.1 in September. Economists had forecast the index at 58.0.

Spot gold was quoted at $603.60/604.60 an ounce by 1645 GMT, below the $606.30 seen after the data, but above the $604/605 an ounce seen late in New York on Monday, when it hit a seven-week high of $610.50 an ounce.

Gold sentiment earlier on Tuesday had been dampened by oil prices holding below $60 a barrel.

"The dollar fell and gold went up after the Chicago PMI data," said James Steele, analyst at HSBC.

Gold is used as a safe-haven investment in times of economic and political uncertainty or when price pressures or inflation expectations are rising, often because of rising oil prices.

Investors mostly shrugged off lower crude oil prices on Monday and bought gold on worries about slow growth in the United States and a weaker dollar. A break above key resistance in the $607-608 area added momentum to gold's rally.

"Yesterday's gold move was independent of oil prices ... (But) if oil prices continue weak, they will drag gold down," an analyst at a European bank said.

DOLLAR LINK

Analysts say gold sentiment over coming months will be more entwined with the fortunes of the dollar than with oil, where the relationship, although still strong, is waning.

"Short-term funds buying interest emerged near the lows (on Monday) and boosted the metal despite weakness in the energy complex, hinting at a possibility that the metal could be breaking its close link with crude oil," Standard Bank said.

Gold also will be supported by jewelry demand from emerging market countries, but for now some analysts think that interest has been sidelined on speculation that prices are more likely to fall than rise.

On the technical front, gold is holding above the key psychological $600 level, which traders say is a bullish signal.

"If it can get through yesterday's high this week, then we are looking at numbers in the mid $650s," a trader said.

Silver drew strength from gold's move higher, but seems to be hemmed in between $12.00 and $12.20 an ounce. It was last quoted at $12.10/12.17 an ounce down from $12.06/12.13 in New York on Monday, when it hit a 7-week high of $12.24.

Platinum was down at $1,076/1,081 from $1,089/1,094 and palladium was softer at $317/320 from $324/329.

The U.S. dollar rose Tuesday against other major currencies in European trading. Gold prices were mixed in Europe.

The euro was quoted at $1.2685, down from $1.2729 late Monday in New York.

Other dollar rates compared with late Monday included: 117.75 Japanese yen, up from 117.41; 1.2514 Swiss francs, up from 1.2481, and 1.1284 Canadian dollars, up from 1.1264.

The British pound was quoted at $1.9001, down from $1.9020.

Gold bullion opened at a bid price of $601.00 a troy ounce in London, up from $596.80 late Monday. In Zurich the bid price was $600.35, down from $607.25.

Gold closed at $600.70 on Tuesday in Hong Kong, up $6.80 an ounce from Friday's close of $593.90. Hong Kong's financial markets were closed Monday for a public holiday.

Silver opened in London at a $12.17 bid per troy ounce, up from $12.14

Gold Fields, the world's third largest gold producer, says it has mailed an offer document to Western Areas shareholders.

In September, the company announced its intention to purchase all the shares in Western Areas at a ratio of 35 Gold Fields shares for every 100 Western Areas shares held.

South Africa's competition authorities still need to approve the deal. "The offer will remain open for a period of at least 14 days after the requisite approvals have been obtained," said a Gold Fields announcement.

Gold rose to its highest level in more than a month on Monday, boosted by a weaker dollar after news of unexpectedly soft economic growth data from the United States, analysts said.

Spot gold was quoted up at $603.10/$604.10 an ounce by 1217 GMT compared with $598.20/$599.70 an ounce late in New York on Friday. Earlier on Monday it hit a session peak of $606, the highest since September 28.

U.S. gross domestic product grew at an annualised 1.6 percent in the third quarter, the lowest rate since the first quarter of 2003, compared with a consensus forecast of 2.2 percent and 2.6 percent in the second quarter.

The data and the sliding dollar prompted investors to pile into gold, seen as a safe-haven against economic turmoil.

"The dollar has taken a bit of a tumble and that in turn has boosted gold, said James Moore, analyst at TheBullionDesk.com.

The dollar was trading near 1-month lows against other major currencies such as the euro and yen on growing speculation that the U.S. Federal Reserve's next move could be to cut benchmark interest rates and boost economic growth.

"It makes you think the Fed may not raise interest rates any further," Moore said. "It's a potentially difficult situation, where the U.S. economy may be looking at stagflation."

Risk-averse investors also use gold as a hedge against inflation, clues to which will come later on Monday with the release of September personal consumption expenditure data -- the Fed's favourite measure.

OIL INFLUENCE

Crude oil prices fell below $60 a barrel on doubts about OPEC's resolve to cut production. Lower oil prices would normally turn sentiment against gold.

"Oil is a negative, but hasn't really had much impact," a trader said. "The market isn't really sure about OPEC's cuts ... Today, it's all to do with the dollar."

But analysts say with the winter season approaching supply concerns could dominate gold prices.

"Opec production data/decisions and U.S. inventories should remain pivotal market drivers," Heraeus said in a research note.

Gold reversed its downtrend last week on news of a large drop in U.S. crude stockpiles, which sent oil prices soaring, back above $60 a barrel.

Falling demand from the physical market with the passing of the Indian festival season is another factor that has, perhaps briefly, been sidelined.

Too, news that Dubai's gold imports fell 9 percent in the third quarter to 117.6 tonnes against the same period last year did little lasting damage to gold sentiment.

However, the metal does have some technical barriers on the upside. The first is an area of congestion between $607 and $608, followed by $640 a high from early September.

Silver, which has been tracking gold, faces first resistance at $12.30 an ounce.

It was last quoted at $12.11/$12.18 an ounce, below the 7-week high of $12.24 an ounce seen earlier in the session and compared with $12.02/$12.09 late in New York on Friday.

Platinum rose to $1,086/$1,xxx from $1,071/1,076 late in New York. Earlier on Monday it hit $1,087 an ounce, the highest since October 20. Palladium was firm at $321/326 an ounce from $316/321.

Gold may rise for a fourth straight week on speculation a slowing U.S. economy will erode the value of the dollar, increasing the appeal of the precious metal as an alternative investment.

Twenty-three of 39 traders, investors and analysts surveyed by Bloomberg News from Sydney to Chicago on Oct. 26 and Oct. 27 advised buying gold, which rose 0.8 percent last week to $601 an ounce in New York. Seven respondents said to sell, and nine were neutral.

Gold has rebounded after a 4.7 percent drop in September that was the second-biggest monthly decline in two years, and the dollar has fallen for two consecutive weeks against the world's major currencies. U.S. economic growth slowed in the third quarter to the slowest pace since 2003 as the housing market slumped and the trade deficit widened.

``It's finally sinking in that this economy is slowing down,'' said Axel Merk, founder of Palo Alto, California-based Merk Investments LLC. ``The housing market is deteriorating sharply. Our clients are concerned that the dollar is no longer a safe asset, and that's why they flee to gold.''

Gold futures for December delivery rose $4.60 an ounce last week on the Comex division of the New York Mercantile Exchange. The gain was predicted by a majority of analysts surveyed on Oct. 19 and Oct. 20. The Bloomberg survey has forecast prices accurately in 79 of 131 weeks, or 60 percent of the time.

The appeal of bullion over the dollar has increased as the outlook for growth dimmed. The U.S. economy expanded at a 1.6 percent annual rate last quarter, the Commerce Department said on Oct. 27. The first estimate of the period's gross domestic product, the value of all goods and services produced, compares with a 2.6 percent gain in the second quarter.

Housing Slump

Residential housing construction fell at an annual rate of 17.4 percent, the biggest decline in 15 years, after shrinking at an 11.1 percent pace in the second quarter. The trade deficit widened to $639.9 billion from $624.2 billion as consumers bought more foreign-made goods.

The U.S. currency lost 1 percent last week against the euro and the yen.

``The dollar is starting to crumble, and gold has found its feet again,'' said Merk, whose fund invests in gold futures and currencies in Western Europe. The Merk Hard Currency Fund has climbed to $42 million from $10 million in March and $1 million at its May 2005 inception.

Federal Reserve policy makers kept their benchmark lending rate at 5.25 percent for a third straight month at their meeting last week and predicted a ``moderate'' pace of expansion.

``Fed officials' latest comments on the U.S. economy and interest rates will cause some weakness in the dollar'' and support gold, said Rowan Menzies, chief commodity analyst at Commodity Warrants Australia in Sydney.

Energy Costs

Rising energy costs may boost gold's appeal as a hedge against inflation, analysts said. Crude oil may rise for the second straight week as the Organization of Petroleum Exporting Countries reduces output and cold weather spurs fuel demand in the northern U.S., according to a separate Bloomberg survey of 46 analysts and traders.

Some investors buy gold to preserve purchasing power in times of accelerating inflation. Gold futures surged to $873 in 1980, when a jump in the cost of oil led to a 13 percent annual rise in U.S. consumer prices.

Tracking Oil

Gold has tumbled 18 percent from a 26-year high of $732 on May 12, partly because of a decline in energy costs from a record. Prices still are up 26 percent in the past year.

Oil jumped 6.9 percent last week after touching $56.55 a barrel on Oct. 20, the lowest since November. In mid-July, prices reached $78.40, the highest ever.

Hedge-fund managers and other large speculators reduced their net-long position in Comex gold futures in the week ended Oct. 24 to the lowest in more than a year, data from the Washington-based Commodity Futures Trading Commission show.

Speculative long positions, or bets that prices will rise, outnumbered short positions by 56,050 contracts, down 9.3 percent from a week earlier.

Gold rose on Friday, recapturing the $600/oz mark as softer-than-expected U.S. economic growth data weakened the dollar. Oil and copper prices also rose.

In agricultural markets, corn and soybeans rose while soybeans ended mixed. Arabica coffee rose but cocoa fell a day after seeing one-month highs. Raw sugar fell on speculative selling.

Orange juice futures firmed on modest buying. Cotton settled mixed after two days of gains.

The Reuters/Jefferies CRB Index, a broad indicator of commodity prices, settled 0.19 percent higher at 312.37. The Goldman Sachs Commodity Index climbed 0.14 percent to 5,907.16.

December gold at the COMEX division of the New York Mercantile Exchange settled up $1.20 at $601 an ounce in a bullish but uncertain market.

"While there was a positive aspect about the oil price and the U.S. dollar, which lent support to the gold market, some of the trading really had a bit of a strained feel about it and almost gave the impression that some players were trying to force the market above $600 and it didn't feel like going," said Bernard Hunter, director of precious metals at Toronto's Scotia Mocatta.

The U.S. government said gross domestic product grew at a slower 1.6 percent annual rate during the third quarter than the 2.2 percent economists had expected and the 2.6 percent of the prior quarter.

The GDP number -- the weakest in three years -- was followed by a bigger than expected rise in the University of Michigan's consumer sentiment index, putting a lid on a Treasury bond rally.

Investors then took profits in the stock market, freeing up money for precious metals, which have enjoyed improving sentiment and rotation out of other markets this week.

The dollar fell with stocks, hurt by both the GDP data and assumption that the Federal Reserve might lean toward easing interest rates in 2007. That, and oil prices holding firm above $60 a barrel, gave gold bulls an excuse to buy the dip.

Gold Fields Ltd, the world's fourth-biggest gold producer, posted a lower-than-expected 28 percent gain in first-quarter profit on Thursday as production edged down and costs jumped.

South Africa's Gold Fields also said it had temporarily halted construction of a new mine in Peru due to an illegal blockade, but this was not expected to result in a major delay to finishing the project.

The group said earnings per share for the three months to end-September, excluding the effects of financial instruments and foreign debt, rose to 142 South African cents from a restated 111 cents the previous quarter.

The firm was expected to post a 36 percent rise in earnings to 146 cents from the previously reported 108 cents, according to the average forecast of seven analysts polled by Reuters. Their estimates were in a range of 130-187 cents.

The company -- which has mines in South Africa, Australia, Ghana and Venezuela -- said gold production fell 1 percent to 1.005 million ounces from the previous quarter.

The firm said it expected output and costs in the current second quarter to be similar to those in the first quarter.

Gold Fields shares, which have gained around 20 percent this year, added 0.73 percent to 134.50 rand by 0725 GMT, compared with a 0.3 percent gain in the local gold mining index.

COSTS JUMP

Unit cash costs during the quarter jumped 12.6 percent to 79,862 rand per kg from a restated 70,908 rand/kg.

The group said it had changed its accounting policy on cash costs to be in line with its South African peers and would now capitalise ore development costs. This had effectively cut reported cash costs by around 9,000 rand per kg.

"Across the board we're facing immense challenges on the cost side and keeping cost increases in the mining sector below national PPI (producer price index) inflation is going to be a huge challenge for us," Chief Executive Ian Cockerill told a conference call.

South African costs rose partly due to a 6 percent wage increase, and overseas costs were affected by a power shortage in Ghana, forcing the firm to use diesel generators that cost an extra $1.5 million in the last three weeks of the quarter.

Cockerill said an illegal road blockade erected 10 days ago near its Cerro Corona project in Peru had temporarily halted construction there.

But the company had obtained a court injunction against the protest and authorities were expected to soon remove it.

"Our view is that within the next few days we'll start to see the project coming back under construction," Cockerill said.

"It seems to have been instigated by political factions ahead of the local mayoral elections ... I don't think it's going to have any material impact on the delay of the project."

The group gave the green light last December for the $227 million gold and copper project, which is expected to produce around 2.3 million ounces of gold and 412,000 tonnes of copper over its 15-year life, averaging around 150,000 ounces of gold and 27,000 tonnes of copper per year.

Operating profit rose 6 percent to 1.99 billion rand, with a weaker rand helping to offset higher costs. A softer rand increases the income from dollar-denominated gold when translated into local currency.

Gold Fields sold its gold for an average of 142,035 rand per kg during the quarter, up 10 percent versus the previous three months, even though the dollar gold price fell slightly.

Gold slipped in cautious
trade on Friday, after another failed attempt to crack a
stubborn $600 an ounce barrier during a fund-led rally in New
York.
 Spot gold eased to $593.20/594.70 an ounce from
$596.00/597.50 an ounce late in the U.S. market on Thursday,
when the metal had hit a high of $598.50 an ounce.
 Some dealers expected gold to trade in a familiar $570 to
$600 range until the U.S. congressional election in early
November.
 "Unless gold breaks above $610, it will be locked in a
range of $570 to $600. A lot of people don't dare to buy gold
at this level and there's no reason to buy," said Ronald Leung,
director of Lee Cheong Gold Dealers in Hong Kong.
 The new benchmark October 2007 future, which was
listed on the Tokyo Commodity Exchange on Friday, ended at
2,289 yen per gram after rising as high as 2,296 --
the highest level for the benchmark contract since October 20.
 "With prices hovering near the upper-end of recent ranges,
buying interest in TOCOM was not strong," a Tokyo broker said.
 TOCOM's key gold contract has been capped around 2,300 yen
in October as weak oil prices eased concerns about inflation
and encouraged funds to shift away from gold, which is
traditionally seen as a hedge against inflation.
 Local investors also shifted their attention from gold to
buoyant grains markets, where concerns about tight supplies
pushed prices to multi-year highs, another broker said.
 Gold has struggled to stay above $600 since mid-September,
when it plunged below that level for the first time in more
than two months on the back of weaker oil.
 Some dealers attributed Thursday's gains to early strength
in oil, weakness in the dollar as well as a perception that
investors who had made money in the energy, grains and stock
markets shifted back to gold.
 But others said gold's failure to regain $600 suggested
that investors are losing faith in the metal. There has been
speculation in recent weeks that investors have ditched gold
and poured money into stocks because of strong global equities.
"We believe that the talk in the markets about asset allocation
shifts from energy markets into precious are overdone, as
confidence in gold as a future performing asset appears quite
low," said Darren Heathcote of Investec Australia in Sydney.
 "The weeks ahead could be very telling for the longer term
trend," he said.
 Crude oil edged down and hovered around $60 a barrel
after a $1 slide the previous day, as the largest U.S. oil
terminal caught up with crude loadings but more OPEC member
supply cuts lent support to a market heading into winter.
 Platinum fell to $1,068/1,073 an ounce from
$1,075/1,080 late in New York.  Palladium slipped to
$319/324 from $320/325 an ounce.
Silver edged down to $12.06/12.12 an ounce from
$12.12/12.19 late in New York.

Gold Fields Ltd, the world's fourth-biggest gold producer, posted a lower-than-expected 28 percent gain in first-quarter profit on Thursday as production edged down and costs jumped.

South Africa's Gold Fields also said it had temporarily halted construction of a new mine in Peru due to an illegal blockade, but this was not expected to result in a major delay to finishing the project.

The group said earnings per share for the three months to end-September, excluding the effects of financial instruments and foreign debt, rose to 142 South African cents from a restated 111 cents the previous quarter.

The firm was expected to post a 36 percent rise in earnings to 146 cents from the previously reported 108 cents, according to the average forecast of seven analysts polled by Reuters. Their estimates were in a range of 130-187 cents.

The company -- which has mines in South Africa, Australia, Ghana and Venezuela -- said gold production fell 1 percent to 1.005 million ounces from the previous quarter.

The firm said it expected output and costs in the current second quarter to be similar to those in the first quarter.

Gold Fields shares, which have gained around 20 percent this year, added 0.73 percent to 134.50 rand by 0725 GMT, compared with a 0.3 percent gain in the local gold mining index.

COSTS JUMP

Unit cash costs during the quarter jumped 12.6 percent to 79,862 rand per kg from a restated 70,908 rand/kg.

The group said it had changed its accounting policy on cash costs to be in line with its South African peers and would now capitalise ore development costs. This had effectively cut reported cash costs by around 9,000 rand per kg.

"Across the board we're facing immense challenges on the cost side and keeping cost increases in the mining sector below national PPI (producer price index) inflation is going to be a huge challenge for us," Chief Executive Ian Cockerill told a conference call.

South African costs rose partly due to a 6 percent wage increase, and overseas costs were affected by a power shortage in Ghana, forcing the firm to use diesel generators that cost an extra $1.5 million in the last three weeks of the quarter.

Cockerill said an illegal road blockade erected 10 days ago near its Cerro Corona project in Peru had temporarily halted construction there.

But the company had obtained a court injunction against the protest and authorities were expected to soon remove it.

"Our view is that within the next few days we'll start to see the project coming back under construction," Cockerill said.

"It seems to have been instigated by political factions ahead of the local mayoral elections ... I don't think it's going to have any material impact on the delay of the project."

The group gave the green light last December for the $227 million gold and copper project, which is expected to produce around 2.3 million ounces of gold and 412,000 tonnes of copper over its 15-year life, averaging around 150,000 ounces of gold and 27,000 tonnes of copper per year.

Operating profit rose 6 percent to 1.99 billion rand, with a weaker rand helping to offset higher costs. A softer rand increases the income from dollar-denominated gold when translated into local currency.

Gold Fields sold its gold for an average of 142,035 rand per kg during the quarter, up 10 percent versus the previous three months, even though the dollar gold price fell slightly.

Gold rose in Asia after an advance in oil prices enhanced the bullion's appeal as a hedge against inflation.

Crude oil climbed for a third day in New York after a government report showed U.S. oil stockpiles unexpectedly fell last week, and product demand climbed to the highest this year. Gold reached a 26-year high in May, partly as oil was heading to a record.

``We have seen gold move pretty closely with crude,'' Gerard Burg, economist at National Bank of Australia Ltd., said by phone from Melbourne. Gold could ``break $600 quite easily if there's a positive trend; maybe crude oil would lead it,'' he said. He was referring to $600, a level that the bullion failed to break past twice this month.

Gold for immediate delivery rose as much as $2.50, or 0.4 percent, to $593.55 an ounce. It traded at $592.05 at 9:38 a.m. Singapore time.

Some investors buy gold when energy expenses climb. Gold futures reached a record $873 an ounce in January 1980 when oil costs doubled in a year, sparking a surge in the inflation rate.

Crude oil for December delivery rose as much as 32 cents, or 0.5 percent, to $61.72 a barrel in after-hours electronic trading on the New York Mercantile Exchange, or Nymex. It traded at $61.64 at 9:38 a.m. Singapore time.

The Federal Reserve's decision yesterday to keep U.S. benchmark interest rate at 5.25 percent for a third month didn't play a major role in the gold market today, said Burg.

``I don't think there was a lot of surprise that the Fed didn't raise rates,'' he said.

The Fed's comments on inflation were also identical to the language in the prior month's statement: ``Some inflation risks remain.''

Gold futures for December delivery rose as much as $5.60, or 1 percent, to $596.40 an ounce on the Comex division of Nymex. It traded at $594.20 an ounce at 9:38 a.m. Singapore time.

Meridian Gold Inc. said Tuesday third-quarter profit fell as the company incurred extra costs related to an acquisition and the retirement of its chief executive.

Reno, Nev.-based Meridian said net earnings fell to $5.7 million, or 6 cents per share, from $9 million, or 9 cents per share, in the same period a year ago.

Quarterly revenue rose to $62.2 million from $42.2 million in 2005.

Gold production totaled 74,180 ounces, at a net cash cost of $66 per ounce.

The company incurred additional costs in the quarter related to the acquisition of Minera Florida SA and incentives related to the retirement of CEO Brian J. Kennedy.

Shares of Meridian rose 27 cents to $24.04 in trading Wednesday on the New York Stock Exchange.

Barrick Gold Corp., the world's biggest gold producer, boosted its hostile takeover offer for NovaGold Resources Inc. by about 10 percent to $1.71 billion, which the company said was its ``best and final'' bid.

The cash offer was raised to $16 a share from $14.50 and the deadline for NovaGold shareholders to accept the bid was extended a fourth time to Nov. 7, Toronto-based Barrick said today in a statement. Barrick needs 50.1 percent of the shares to proceed with its takeover of Vancouver-based NovaGold.

Gold producers are making more takeover bids after bullion prices surged to a 26-year high and new reserves became harder to find. Barrick became the largest gold producer in March with its $10 billion acquisition of Placer Dome Inc. Shares of NovaGold rose 3.8 percent today to $15.64 in New York.

``Barrick's going to start to get some stock in this tender process based on the fact that the stock price is not trading above the tender offer now,'' said Sprott Securities analyst David Stein, who rates the stock a ``market perform'' and doesn't own shares. ``Whether it's enough to get 50 percent or not, that's a tough call.''

On the Toronto Stock Exchange, NovaGold rose 60 cents, or 3.5 percent, to C$17.63 at 12:17 p.m., giving the company a market value of C$1.88 billion ($1.67 billion) based on 106.7 million fully diluted shares outstanding.

NovaGold Response

NovaGold, which already had rejected the earlier offer, said in a separate statement that it is reviewing the revised bid and advised shareholders to take no action. NovaGold investors have so far tendered 167,679 shares to the offer, Barrick said.

``I suspect that the board will come out and reject the offer again,'' Stein said. ``My feeling is that there's a group of investors who will probably continue to side with management.''

Barrick probably would need to bid ``north of $20'' to win the support of all NovaGold shareholders,'' Stein said. Sprott Securities has participated in a NovaGold financing within the past two years.

``We are confident that we have arrived at a price which strikes a balance between NovaGold shareholder expectations of value and a price that is acceptable to Barrick,'' Barrick Chief Executive Officer Greg Wilkins said today in a statement.

Barrick shares rose 9 cents to C$34.33 in Toronto.

Barrick's offer is 6 percent above NovaGold's closing price of C$17.03 yesterday and about 36 percent higher than the stock price on July 21, the day before Barrick said it planned to acquire the gold company.

The U.S. dollar fell Wednesday against other major currencies in European trading. Gold prices rose.

The euro was quoted at $1.2571, up from $1.2566 late Tuesday in New York.

Other dollar rates compared with late rates Tuesday included: 119.11 Japanese yen, down from 119.27; 1.2654 Swiss francs, down from 1.2661, and 1.1282 Canadian dollars, up from 1.1254.

The British pound was quoted at $1.8764, up from $1.8742.

Gold traded in London at $581.60 bid per troy ounce, up from $581.00 late Tuesday. In Zurich, gold traded at $582.40, up from $579.60. Gold rose $3.50 in Hong Kong to close at $581.90.

Silver opened in London at $11.42, down from $11.51.

Glamis Gold Ltd. , which has agreed to be taken over by Goldcorp Inc., reported a 12-fold jump in third-quarter profit on Tuesday, thanks to increased output and higher gold prices.

Glamis earned $19.2 million, or 11 cents a share, in the three months ended September 30, up from $1.6 million, or 1 cent a share, in the same period a year earlier.

Glamis said it produced 145,634 ounces of gold at a total cash cost of $182 per ounce, compared with 90,535 ounces of gold at $231 an ounce a year earlier.

Revenue more than doubled to $91.8 million from $41.1 million as sales volume surged to 144,113 ounces of gold from 91,625 ounces and average prices climbed to $609 an ounce from $446 a year earlier.

Glamis, meanwhile, boosted production to 145,634 ounces from 90,535 ounces and generated cash flow of $38.4 million, up from $14.8 million.

The company trimmed the cash cost of production to $182 per ounce from $231.

However, the company expects 2006 gold output to be lower, totaling about 610,000 ounces at about $190 per ounce, down slightly from a previously forecast 620,000 ounces.

President and CEO Kevin McArthur said Glamis' third-quarter output was beefed up by its El Sauzal mine in Mexico, which accounted for 77,085 ounces, more than half the quarter's output.

Glamis' shareholders will vote October 26 on the deal, which will create one of the biggest gold companies in the world.

The combined tender of shares and cash was worth $8.6 billion when first announced in late August, but has since declined, in line with Goldcorp's share price.

Shares of Glamis advanced 46 Canadian cents, or 1.1 percent in morning trading, to C$43.76 on the Toronto Stock Exchange, outperforming a rise of 0.12 percent in the benchmark S&P/TSX composite index <.GSPTSE>.

Volume of 1.9 million shares, including 1.5 million in block trades, in just two hours of trading exceeded a daily average of 1.3 million over the past five days.

Shares of gold producers edged higher Tuesday, as the market price of the yellow metal rose.

Gold for December delivery gained $3.40 to $586.30 an ounce on the New York Mercantile Exchange.

Shares of Barrick Gold Corp. rose 25 cents to $30.60 in afternoon trading on the New York Stock Exchange. Earlier Tuesday, Barrick raised its hostile bid to acquire NovaGold Resources Inc., which saw its shares jump 56 cents, or 3.7 percent, to $15.63 on the American Stock Exchange.

Newmont Mining Corp. shares climbed 60 cents to $43.85 on the Big Board. AngloGold Ashanti Ltd. shares rose 62 cents to $41.29, while Gold Fields Ltd. shares edged up 10 cents to $17.11.

The dollar dipped against most major currencies, while oil prices rose. A barrel of light, sweet crude added 72 cents to $59.53 per barrel on the Nymex.

A combination of dollar weakness and higher oil prices _ which can signal rising inflation _ often leads investors to gold, which is considered by some as a hedge against inflation and a safer haven for funds when the dollar is in decline.

Gold in New York fell the most in two weeks in early Tuesday trading as a gain in the value of the dollar against the euro reduced the metal's appeal as an alternative investment.

Gold, sold in dollars, generally moves in the opposite direction of the U.S. currency, which advanced today on expectations interest rates in the U.S. will remain higher than Europe's. A drop in oil prices also reduced the metal's appeal as a hedge against inflation.

``With the stronger U.S. dollar and lower oil prices, gold's going to have a problem holding on to $600,'' said Mike Sander, a commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California. ``There's less of an inflationary risk.''

Gold futures for December delivery tumbled $13.50, or 2.3 percent, to $582.90 an ounce on the Comex division of the New York Mercantile Exchange, the biggest percentage drop since Oct. 4. Prices still are up 24 percent from a year ago.

A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.

Interest-rate futures indicate a 12 percent chance the Fed will raise its benchmark rate to 5.5 percent from 5.25 at its Jan. 31 meeting, compared with a 46 percent likelihood of a cut signaled on Sept. 25.

The U.S. central bank halted a two-year cycle of raising rates at its August meeting. Gold is up 13 percent this year, and the euro has climbed 5.9 percent against the dollar.

Gold also fell as oil dropped for a second straight day on speculation the Organization of Petroleum Exporting Countries won't cut production as much as members had planned.

`Benign' Inflation Outlook

``The inflation outlook is fairly benign,'' said David Thurtell, an analyst at BNP Paribas in London. ``Investor demand will not be as strong as it has been.''

Gold has slumped 20 percent from a 26-year high of $732 an ounce in mid-May. Oil prices have dropped 25 percent from a record $78.40 in July.

Some investors buy gold when energy expenses climb. Gold futures reached a record $873 an ounce in January 1980 when oil costs doubled in a year, sparking a surge in the inflation rate.

Hedge-fund managers and other large speculators reduced their net-long position in Comex gold in the week ended Oct. 17 to the lowest in more than a year, Commodity Futures Trading Commission data showed on Oct. 20. Speculative long positions, or bets that prices will rise, outnumbered short positions by 61,259 contracts, down 1.9 percent from a week earlier.

``There seems little sign of investors and speculators wanting to rebuild long positions,'' John Reade, an analyst at UBS AG in London, said in a report.

Gold miners are expected to post strong third-quarter results as the price of the yellow metal hovered in historically high territory during the period, despite a slight pullback from the previous quarter.

Following a second quarter that saw the price of gold settle at a multi-decade high of $719.80 an ounce in May, third-quarter gold prices lost some of their luster. Gold averaged $621 an ounce in the third quarter, compared to more than $628 an ounce in the second quarter this year, according to estimates by HSBC analyst Victor Flores.

The analyst said he expects most of the major gold producers to earn less in the September quarter than they did in the June quarter, as a result.

However, Flores said those gold miners with significant copper operations _ such as Barrick Gold Corp. _ will likely see sequential improvement, as average copper prices rose in the third quarter. Copper averaged $3.48 a pound in the latest period versus $3.30 a pound in the second quarter.

New Orleans-based Freeport McMoran Copper & Gold Inc. last week reported profit more than doubled in the third quarter, due to year-over-year improvement in gold and copper prices.

Average silver prices slipped 5 percent quarter-over-quarter to $11.72 an ounce.

Flores noted that the dark spot for most miners will likely be on the cost side, where the industry continued to struggle with high diesel and steel prices along with labor shortages.

Patrick Chidley, an analyst with Barnard Jacobs Mellet, expects strong results from Barrick Gold, driven by slightly higher gold production, similar costs and strong metals prices. He forecasts cost increases at Glamis Gold Ltd. and weaker production at Meridian Gold Inc. Operating difficulties are likely to impact Newmont Mining Corp.'s results. The company reports on Nov. 1.

Meridian Gold and Glamis Gold are expected to post results on Tuesday. Barrick Gold is scheduled to report quarterly earnings on Nov. 2.

South Africa's Gold Fields Ltd. plans a secondary listing on the Dubai International Financial Exchange by the end of October and may seek further listings in Asia to boost liquidity of its shares, the group said on Monday.

Gold Fields, the world's fourth-biggest gold producer, said it will be the first African and gold mining company to list on the Dubai exchange.

"There is tremendous liquidity there and the ability to attract some of those investment dollars into Gold Fields stock will be very, very beneficial to the company," Chief Executive Ian Cockerill told Reuters.

Although Gold Fields already has some investors in the Middle East, a listing in the region is expected to attact those who feel more comfortable trading on the home bourse, he added.

"We've done some pre-marketing and we find a lot of interest in gold. Clearly Dubai is a city of gold," Cockerill said.

Dubai is a trading hub, acting as the entry point for physical gold moving to the Middle East, Central Asia and the Indian sub-continent.

Strong domestic demand has pushed Dubai's per capita gold consumption to the highest level in the world, a statement by Gold Fields said.

Gold Fields is also looking into adding further secondary listings to the existing ones in London, New York, Euronext and the Swiss Stock Exchange SWX.

"There may be even more (listings) in the future in the Far East... the world's investment dollars are increasingly moving towards the east and companies need to follow the money," Cockerill said.

He said it was too early to say which bourse might be next, but named Bombay, Singapore, Hong Kong, Shanghai, Tokyo and Sydney as possibilities.

An Asian listing could allow trading in Gold Fields shares virtually 24 hours a day and 7 days a week, he added.

Gold Fields shares, which have gained 14 percent this year, slipped 0.46 percent to 127.42 rand by 0745 GMT compared with a 1.08 percent fall in the gold mining index.

Gold hovered below $600 an
ounce on Monday after oil weakened on doubts about OPEC's
pledge to cut output, with the metal's failure to hold on to
last week's gains likely to exasperate some investors.
 The physical sector was slow in Southeast Asia, with main
buyer Indonesia away for the Muslim Eid al-Fitr holiday this
week. Markets in Thailand were closed on Monday for King
Chulalongkorn Day.
 Spot gold hit an intraday high of $592.50 an ounce
and was at $592.00/593.00 by 0512 GMT, steady from
$591.90/592.90 in late New York trade.
 "If it keeps going sideways, investors are going to get
impatient with it anyway," said commodities analyst Tobin Gorey
of Commonwealth Bank of Australia.
 Shares in Australian gold miners suffered, with Lihir Gold
Ltd. down 1.4 percent, Newcrest Mining Ltd.
down 0.89 percent and Oxiana Ltd. down 1.5 percent.
 Gold rose to its highest in more than two weeks at $602.20
on Friday before selling kicked in after crude oil reversed
gains. It often takes its direction from the oil market as
rising energy costs tend to boost its appeal as a hedge against
inflation.
 Dealers said gold would have to break resistance at $605
and stay above that level to prevent investors from liquidating
their positions. It is now trading around $130 an ounce lower
than the 26-year high of $730 hit in mid-May.
 "It had another failure at the highs. It proves to me that
things are a bit bearish. But I reckon a close above $605 will
make us change our mind," said a dealer in Sydney.
 Crude oil fell due to doubts about OPEC's resolve to
curb output and high U.S. inventories.
 OPEC announced a surprise agreement to curb output by 1.2
million barrels per day on Friday -- larger than an expected
cut of 1 million bpd. It was the deepest cut since January 2002
and equal to about 4.3 percent of September supply.
 "My customers are telling me they have already bought
enough gold. Maybe we would have to test the lower end before
testing $600 again," said a dealer in Singapore.
 "Actually, I am lost about the market," he said.
 Key gold futures on the Tokyo Commodity Exchange,
currently August 2007, fell 24 yen per gram to 2,283 yen,
reflecting declines in New York's COMEX market.
 Dealers were also watching the currency market ahead of a
Federal Reserve policy meeting.
 The Fed is widely expected to keep its funds rate at 5.25
percent when it concludes the two-day meeting on Wednesday.
 The dollar inched up to 118.80 yen from 118.70 yen
in late U.S. trade. The euro was little changed at $1.2615.
 Platinum fell to $1,075/1,080 an ounce from
$1,076/1,081 late in New York. Palladium fell to
$322.50/327.50 an ounce from $325/330 in New York.
 Silver edged down to $11.84/11.91 an ounce from
$11.85/11.92 late in New York.

Gold may rise for a third week on speculation the Federal Reserve will keep interest rates unchanged for the rest of this year as the U.S. economy slows, eroding the value of the dollar.

Fifteen of 25 traders, investors and analysts surveyed by Bloomberg from Sydney to Chicago on Oct. 19 and Oct. 20 advised buying gold, which rose 0.6 percent last week to $596.40 an ounce. Two respondents said to sell gold and eight were neutral.

The Fed halted two years of rate increases on June 29 and probably will leave them unchanged at an Oct. 25 meeting, according to a separate survey of economists. Higher loan costs intended to combat inflation have slowed home buying and fueled gold's 19 percent drop from a 26-year high in May. Lower interest rates may reduce the value of the dollar and enhance the appeal of gold as an alternative investment.

``The Fed doesn't want to set off some sort of vicious cycle in which weakness in housing causes weakness in consumer spending,'' said Stephen Leeb of Leeb Capital Management, which overseas $145 million in New York, including gold stocks. ``Over the long haul, the dollar is going to go down. The winner here is going to be gold.''

Gold futures for December delivery rose $3.70 an ounce on the Comex division of the New York Mercantile Exchange, as predicted by a majority of analysts surveyed on Oct. 12 and Oct. 13. The Bloomberg survey has forecast prices accurately in 78 of 130 weeks, or 60 percent of the time.

Home Sales Fall

The National Association of Realtors probably will say this week sales of existing homes in the U.S. fell last month to an annual rate of 6.21 million from 6.3 million in August, according to the average forecast of 51 economists surveyed by Bloomberg. Prices of existing homes dropped in August for the first time in 11 years, and sales were the lowest since 2004.

U.S. new-house prices will decline this year for the first time since the 1991 recession as a glut of properties forces builders to offer discounts, the realtor trade group said this month.

``We are watching housing data very closely,'' said John Licata, chief investment strategist at Blue Phoenix Inc., an energy and precious-metals consultant in New York. The U.S. economy is ``growing at a slower pace,'' said Licata, who expects gold to reach $800 in 2007. ``I don't think the Fed is going to do anything to shock investors throughout the remainder of 2006.''

The Commerce Department on Oct. 27 probably will say that the U.S. economy slowed to a 2 percent growth in the third quarter from 2.6 percent in the second quarter, according to the average of 65 economists surveyed by Bloomberg News.

Slowing Economy

The Fed will have to cut interest rates by July, Caterpillar Inc., the world's largest maker of earthmoving equipment, said last week. Caterpillar, based in Peoria, Illinois, said Oct. 20 that sales will weaken next year as the economy loses steam. The forecast sparked a 15 percent drop in the company's shares, the most in 19 years.

Caterpillar, a bellwether of the U.S. economy, predicted decreases in U.S. housing starts to about 1.75 million units in 2007 and a rate cut by the Fed of 50 to 100 basis points in the first half of 2007. The current rate is 5.25 percent.

``I'm betting gold moves higher from here'' as the dollar weakens, said Ralph Preston, an analyst at Heritage West Financial Inc., a futures brokerage in San Diego, California. ``Looks like the Federal Reserve will stay on hold with rates this coming week and that should be enough to embolden gold bulls to challenge the $612 area.''

Speculators

Investors continue to put money into gold bars and coins, even as speculators reduce their bets on a rally in futures prices.

In the third quarter, seven gold exchange-traded funds including the StreetTracks Gold Trust had a net inflow of 17.89 metric tons, worth about $358 million, the producer-funded World Gold Council said Oct. 18. This represents a 3.2 percent growth in volume terms and 2 percent in dollar terms.

This ``stands in stark contrast to the liquidation seen in the futures market,'' Katharine Pulvermacher, the managing director of investment research and marketing, and other analysts said in the report. It ``reflects a substantially different investor profile than that of the shorter term investors who have historically dominated the futures market.''

Hedge-fund managers and other large speculators reduced their net-long position in Comex gold futures in the week ended Oct. 17 to the lowest in more than a year, Commodity Futures Trading Commission data show. Speculative long positions, or bets that prices will rise, outnumbered short positions by 61,259 contracts, down 1.9 percent from a week earlier and 32 percent from July 5 to Oct. 3.

Victorian Premier Steve Bracks declared a second gold rush in the state, officially opening a new mine in Bendigo in central Victoria.

Mr Bracks said the mine at its peak would produce more than 600,000 ounces of gold per year, making it the third largest gold mine in Australia.

"This is going to be a great second gold rush for central Victoria," he told reporters at the mine.

"There's going to be a great benefit, about $350 million extra in the economy, because of this gold mine."

Bendigo Mining currently employs 230 people on the project, which is expected to rise to 580 at its peak.

The mine will be developed in two phases, with Kangaroo Flat producing gold from 2006 and an Eaglehawk site starting operations after 2011.

Bendigo was a centre of the Victorian gold rush of the 1850s and yielded more than 20 million ounces of gold between 1851 and 1954.

Gold spiked above the key $600 level on an unexpectedly large cut in Opec oil product, but fell back on Friday after oil failed to hold onto gains, traders said.

“The short-term mood is fairly bullish and whether we can continue to move higher will depend on today and Monday and how strong the upside momentum is,” a dealer said.

“If we don’t manage to see a sustained break of $600, we could see a setback. The target is $605 to $620 but the question is whether we got there directly or whether we have to first build a base between $595 and $600.”

Spot gold was at $598,25/599,25 a troy ounce in late morning trade, up from New York’s $598,40/599,40. Gold had struggled to crack the $600 level all week, with stiff resistance still seen in the $607/610 area.

Some dealers have been disappointed by gold’s relatively poor performance despite investors showing an increased level of risk appetite. “Gold poked its head up to $602 but there was good selling there,” another dealer said.

“Some investors who had been holding on waiting for a chance to get out may have seen this as their opportunity to liquidate and will look for other markets.”

US crude oil futures were sitting just below $59 at $58,65 a barrel in late morning trade, up 15 cents. Opec agreed to slash real production by about 4,3% from September, a bigger cut than the 1 million bpd that had been discussed and its deepest cut since January 2002.

“Oil hasn’t done much after the initial spike following the Opec announcement and we haven’t seen the move many had people had hoped for,” the second dealer said.

“If oil had continued higher, gold may have pushed through. I think the market will drift until the Americans come in,” he said.

Precious metal may be aided by the currency markets — a more traditional driver for gold, which has recently switched its focus more over to the oil market.

“Disappointing economic data are piling up and weakening the dollar. This is further aiding gold,” James Steel, analyst at HSBC said in a daily note.

Financial markets are waiting for a meeting of the US central bank to set interest rates next week. The Federal Reserve is expected to keep rates on hold at 5,25%, standing still for the third straight meeting since halting a two-year tightening campaign in June.

The dollar tumbled on Thursday after data showed a surprise fall in manufacturing activity in the US Mid-Atlantic region that revived concerns about the health of the US economy.

Silver tracked gold lower sinking back below $12 an ounce in late morning trade at $11,96/12,03 versus New York’s $12,04/12,11.

Palladium scored a six-week high overnight at $333 an ounce and was last at $323/327, down from New York’s $327/332.

Most analysts still preferred platinum over palladium given its tighter fundamental situation. Platinum inched lower to $1,081/1,086 from $1,082.

Gold futures climbed above $600 an ounce Thursday morning to trade near their highest level in three weeks with the return of the precious metal's allure as a defensive investment measure in the face of strength in oil prices and weakness in the U.S. dollar.

"Gold continues to build a base after absorbing strong bouts of selling," said Peter Grandich, editor of the Grandich Letter.

"A close above $610 is needed to turn the market technically bullish again and that appears to be only a question of when," he said.

Gold for December delivery climbed $9.40 to $602 an ounce on the New York Mercantile Exchange, after rising as high as $604. The contract hadn't traded above $600 since Oct. 2.

December silver rose by 30 cents, or 2.5%, to stand at $12.12 an ounce.

Gold fell in New York for the second straight day after a drop in oil prices reduced the metal's appeal as a hedge against inflation.

The price of gold has followed oil this year. The metal has fallen 19 percent from a 26-year high, partly as oil shed 26 percent from a record in July. Oil today fell as much as 2.7 percent after climbing above $59 a barrel. Gold is up 14 percent this year.

``Gold is really following the crude market,'' said Michael Guido, director of hedge-fund marketing at Societe Generale in New York. ``A fall below $58 could drag gold down further.''

Gold futures for December delivery fell 90 cents, or 0.2 percent, to $592.60 an ounce on the Comex division of the New York Mercantile Exchange. Prices dropped 0.8 percent yesterday.

A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.

Some investors buy gold when energy expenses climb. Gold futures reached a record $873 an ounce in January 1980 when oil costs doubled in a year, sparking a surge in the inflation rate. Oil dropped today after U.S. inventories last week gained more than analysts forecast.

Gold's losses accelerated after the Dow Jones Industrial Average breached 12,000 for the first time. A rally in equities may attract speculative money away from gold, other metals, energy and agricultural products, traders said.

`Take Money'

``There was concern with the stock market,'' said Nick Ruggiero, a trader at Eagle Futures Inc. in New York. ``If the Dow keeps rallying, that's going to take money from gold and all the commodities.''

Hedge-fund managers and other large speculators decreased their net-long position in Comex gold futures in the week ended Oct. 10, according to Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 62,449 contracts on the Comex, down 10 percent from a week earlier, and the lowest this year, the Washington-based commission said Oct. 13.

``One of the biggest threats to commodities is the flow of money into equities,'' Societe Generale's Guido said. ``That could strip money from the gold market.''

The Reuters/Jefferies CRB Index fell for a second straight day. The gauge of 19 commodities reached a record in May and plunged 12 percent in the third quarter, the most in 50 years.

Gold opened higher, buoyed by reports that showed consumer prices continued to rise, even as oil prices dropped in the past three months. Excluding food and energy, so-called core prices rose 0.2 percent in September, the Labor Department said today.

Core prices rose 2.9 percent from a year earlier, the biggest 12-month jump since February 1996, after a 2.8 percent gain in August.

Core prices paid to U.S. producers rose 0.6 percent in September, the agency reported yesterday. The increase was the biggest since January 2005.

``Given gold's general role as an inflation hedge, a person can buy gold on the core numbers,'' said Daniel Vaught, a commodity analyst at A.G. Edwards Inc. in St. Louis. ``The core numbers remain relatively high.''

Gold tracked crude oil higher in cautious trade on Wednesday, but the metal may lack impetus to rise further after it failed to break $600 an ounce.

The physical sector saw light bullion purchases from Indonesia ahead of next week's Muslim holiday. Other precious metals were also volatile, with silver, platinum and palladium trading below their recent highs.

Spot gold rose to $591.75/592.25 an ounce from $590.30/591.30 late in New York.

Gold hit a two-week high of $597.50 an ounce on Tuesday, just below the key barrier of $600, before a drop in oil ignited selling from speculators.

Investec Australia pegged support at $570 an ounce.

"There's some buying from Indonesia but I don't think they want to stock up too much. Gold may attempt to break $600 again but I think oil will play a crucial role," said a dealer in Singapore.

Indonesians have returned to jewelry shops ahead of the Eid al-Fitr celebration, but dealers said purchases from jewelry makers had been limited, suggesting that many factories relied on old stocks.

The World Gold Council puts Indonesia's gold consumption at 81 tonnes in 2005, making it Southeast Asia's main buyer of the precious metal used in jewelry and investment.

Premiums for gold bars were steady at between 20 and 60 U.S. cents an ounce to the spot London price in Singapore

.

Crude oil hovered above $59 a barrel as dealers weighed an expected rise in robust U.S. crude oil stocks against an OPEC meeting that is likely to seal a deal to cut output.

"I think the oil price will gradually get better. If oil is over $60, the gold price will increase but I don't expect it to happen at this moment," said Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo.

"$600 is still a big resistance," he said.

Ministers from the Organization of the Petroleum Exporting Countries are scheduled to meet in Qatar on Thursday to clear a deal to remove 1 million barrels from daily output to try to stem oil's drop from a high of $78.40 in July.

But OPEC has been divided on whether it should cut output from actual production of roughly 27.5 million barrels per day (bpd) or from its nominal 28 million bpd ceiling.

Key gold futures on the Tokyo Commodity Exchange , currently August 2007, dropped 29 yen per gram to 2,275 yen ($19.13), reflecting losses in New York's COMEX market.

Investors also took profits after pushing up the contract to a two-week high of 2,310 yen on Tuesday.

In other precious metals, platinum rose to $1,088/1,093 an ounce from $1,067/1,071 late in New York on Tuesday, when it hit a two-week high of $1,096.

Palladium rose to $317/322 an ounce from $315/320 in New York. The metal hit an intraday high of $324 on Tuesday, its best level since mid-September.

Silver edged up to $11.72/11.79 an ounce from $11.68/11.75 late in New York but traded below Tuesday's five-week high of $11.90 an ounce.

Mining company Freeport-McMoRan Copper & Gold Inc. said Tuesday that third-quarter earnings more than doubled on sharply higher copper and gold prices.

Net income rose to $350.7 million, $1.67 per share, from $165.8 million, or 86 cents per share, a year ago. Excluding charges and gains on debt reduction, preferred share redemption and land sales, the company earned $1.73 per share in the latest period.

Revenue grew to $1.64 billion from $983.3 million last year.

Analysts surveyed by Thomson Financial were looking for profit of $1.59 per share on sales of $1.31 billion.

The company said average realized prices per pound of copper rose to $3.43 from $1.73 last year, and to $3.38 from $1.67 for gold.

Third-quarter sales for PT Freeport Indonesia, the company's Indonesian mining unit, totaled 323.6 million pounds of copper and 478.0 thousand ounces of gold, down from last year's sales, but above revised estimates the company supplied in July of 280.0 million pounds of copper and 320.0 thousand ounces of gold. The higher-than-expected sales reflect the mining of a high-grade section of the Grasberg pit previously scheduled to be mined in future periods.

The company forecasts annual sales for 2006 of about 1.2 billion pounds of copper and 1.7 million ounces of gold, including 415 million pounds of copper and 470 thousand ounces of gold estimated for the fourth quarter.

Gold rose to its highest in two
weeks on Tuesday, steered by firmer crude oil prices, although a
stronger dollar prevented prices from regaining $600 for now.
 Other metals took heart from gold's strength, with silver
and palladium extending Monday's run up to five-week peaks and
platinum at a two-week high.
 Spot gold hit a high of $597.50 an ounce during Asian
trade, but slipped back to $595.20/596.20 by 0922 GMT, unchanged
from New York's late-traded levels on Monday.
 Buoyant base metals markets, crude oil back over $60 a
barrel and ongoing geopolitical nervousness over North Korea
were providing a cushion of support underneath gold prices,
traders said.
 "We also feel there is some good physical demand for gold
that is underpinning the price," David Holmes, director of
precious metals sales at Dresdner Kleinwort, said.
 That, coupled with the possibility that economic data out
during the week could cause a touch of dollar weakness, had
triggered short-covering.
 "But what we haven't seen is people piling in saying: we
must have gold. That's the missing part. There isn't a new
generation of people coming in and paying whatever the offer
is," Holmes added.
 Exporters in Turkey reported that September gold jewellery
exports were down more than 30 percent year on year, to 8.4
tonnes.
 Analysts who track historical price patterns to predict
future moves said gold must hurdle the psychological $600/oz
barrier to avoid becoming trapped in a congested trading area.
 Failure to do so could send gold sliding back down towards
$575 or even $540, Standard Bank London said in a note.
 Bullion prices have slipped steadily since hitting a 26-year
peak at $730 an ounce in May, with each rally attempt since then
resulting in progressively lower peaks.
 Analysts said an upcoming meeting of oil producers (OPEC) to
finalise a deal to cut crude output could be a make or break
trigger for gold prices.
 Traditionally gold's correlation to oil prices has been
relatively weak, but it has strengthened in recent weeks.
 U.S. crude oil futures rose for a fourth session on
Tuesday to hover above $60 a barrel on Tuesday.
 Ebullient base metals markets -- tin, nickel and zinc have
all hit fresh record highs in recent days -- also helped
sentiment in gold.
 News that North Korea had conducted a nuclear test last week
helped push up prices.
 Platinum rose to $1,092/1,097 an ounce, from
$1,083/1,088 late in New York.  Palladium hit a five-week
high of $324. Prices were last unchanged at $320/325.
 Silver also hit a five-week high of $11.87 an ounce,
before slipping back to $11.79/11.86, slightly off its late New
York level of $11.81/11.88.

Gold traded near a two-week high in London after the United Nations Security Council voted unanimously to punish North Korea for a suspected nuclear-bomb test, spurring demand for the metal as a haven.

The Security Council adopted a resolution at the weekend demanding the communist nation cease tests. North Korea ``totally rejects'' the resolution, Ambassador Pak Gil Yon said at the UN after it was passed, adding that further pressure on the country would result in ``physical counter measures.''

``Concerns over the recent build-up in tensions between North Korea and the western world,'' have pushed up prices of precious metals, James Moore, a Kettering, U.K.-based analyst with TheBullionDesk.com, said in an e-mailed note today. It ``will likely be a supporting factor in the coming days and weeks, particularly if the saber-rattling intensifies.''

Gold for immediate delivery rose as much as $3.20, or 0.5 percent, to $593.60 an ounce in London, the highest since Oct. 3. It traded at $591.90 as of 9:01 a.m. local time.

Some investors buy gold in times of political uncertainty. The metal jumped 5.3 percent after Sept. 11, 2001, terrorist attacks on the U.S.

``Firmness in the oil market'' also pushed gold prices higher, Moore said. Some investors buy the metal as a hedge against inflation.

Crude oil rose for a third day in New York on concern members of the Organization of Petroleum Exporting Countries will increase production cuts to stem a decline in prices in the past three months. Gold last week had its biggest weekly gain since July as energy costs climbed.

Oil `Overwhelming'

Crude oil for November delivery gained as much as 65 cents, or 1.1 percent, to $59.22 a barrel in after-hours trading on the New York Mercantile Exchange. It was at $59.17 a barrel at 9:07 a.m. London time.

``The overwhelming thing at the moment is crude and the direction it's going,'' Rowan Menzies, chief commodity analyst at Commodity Warrants Australia Ltd., said by phone from Sydney. Gold's rally and its ability to remain above $575-$580 level last week ``has given fund buyers and technical buyers a reason to get back in the gold market,'' Menzies said.

Among other precious metals for immediate delivery in London, silver gained 7 cents, or 0.6 percent, to $11.70 an ounce, platinum climbed $8.25, or 0.8 percent, to $1,084.50 and palladium rose $6, or 1.9 percent, to $319.50.

Gold may rally for a second straight week on speculation a slowing U.S. economy will prevent the Federal Reserve from raising interest rates anytime soon, eroding the value of the dollar.

Eighteen of 34 traders, investors and analysts surveyed by Bloomberg from Sydney to Chicago on Oct. 12 and Oct. 13 advised buying gold, which rose 2.8 percent last week to $592.70 an ounce in New York. The gain was the biggest since July. Eleven people said to sell the metal, and five were neutral.

The Fed hasn't raised rates since June 29, which may help gold recover from its biggest quarterly decline in more than two years. U.S. new-house prices will fall this year for the first time since 1991 because of a property glut and high loan costs after 17 straight interest-rate increases by the Fed since 2004, the National Association of Realtors said.

``Rate hikes have bolstered the U.S. economy as far as they can,'' said A.C. Moore, who manages the $500 million Dunvegan Growth fund in Santa Barbara, California, and bought more gold last week. ``The Fed is walking a very thin line. With inflation still mounting, it's tantamount to a rate cut. That's going to be a positive for gold.''

Gold futures for December delivery rose $15.90 last week on the Comex division of the New York Mercantile Exchange. The gain surprised analysts surveyed Oct. 5 and Oct. 6 who had expected a decline. Bloomberg's survey has forecast the direction of prices accurately in 77 of 129 weeks, or 60 percent of the time.

Dollar vs Gold

Gold and the dollar generally move in opposite directions. Gold has gained every year since 2001, and has more that doubled in the past five years. The dollar index rose last year after three consecutive annual declines, as the Fed boosted rates to combat inflation.

The dollar is little changed against a group of six major currencies since the Fed first began raising rates in June 2004, while gold has jumped 47 percent. The dollar index is down 4.4 percent this year, compared with a 14 percent gain in gold.

``All the arguments that took gold from $250 to $700 remain the same,'' said George Milling-Stanley, New York-based manager of market analysis at the producer-funded World Gold Council. ``The dollar seems to be in a secular downward trend. That's been good for gold and we continue to think it'll be good for gold.''

Some investors are betting a weaker dollar will boost gold prices and are increasing their holdings of bullion as a long- term investment, even after gold has declined 19 percent from a 26-year high of $732 on May 12.

Gold Fund

The amount of metal held by the StreetTracks Gold Trust, an exchange-traded fund linked to the price of gold, has climbed above 390 tons in the past month, the highest since its November 2004 introduction.

The value of the fund has since fallen to $7.3 billion from a record $8.2 billion reached in May. Still, more gold is being stored in the trust to issue shares, a signal that investment demand remains strong, Milling-Stanley said. The ETF began trading on the Singapore Exchange on Oct. 11.

``It tells you that people who are buying the ETF are taking a long-term view and making a long-term strategic allocation to gold,'' Milling-Stanley said.

A rally in gold prices may attract speculative money that spurred gains during the first half of the year, some traders said. Prices dropped 1.9 percent in the third quarter, the first decline in six quarters and the biggest since the second quarter of 2004.

Buying Will Resume

``Once gold starts rallying, you're going to get the momentum guys coming back in,'' said Billy Flahive, gold trader and partner at Eagle Futures Inc. in New York.

Hedge-fund managers and other large speculators decreased their net-long position in New York gold futures in the week ended Oct. 10, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 62,449 contracts on the Comex, down 10 percent from a week earlier, the Washington-based commission said Oct. 13.

Gold prices may mirror movements in oil, analysts said. Gold futures reached a record $873 an ounce in January 1980 after oil costs doubled in a year, sparking a surge in inflation.

``Prices could easily go past the $600 level'' should the Organization of Petroleum Exporting Countries reduce production to raise oil prices, said Alex Mathews, head of research at Geojit Financial Services Ltd. in Mumbai. OPEC meets Oct. 19 in Qatar.

Gold may rise as physical demand picks up. Jewelers, who accounted for 73 percent of purchases last year, are becoming accustomed to buying gold as high as $580, some analysts said. Jewelers often stock up in the fourth quarter for the year-end holiday season. Gold has gained in every fourth quarter since 2001.

``Physical demand remains good at the lower end of the $570 to $580 range,'' said Peter Tse, Hong-Kong based chief precious metals trader at ScotiaMocatta, the bullion unit of the Bank of Nova Scotia.

Gold rose for a second day after crude oil prices jumped the most in a week, increasing speculation inflation will accelerate. Some investors buy gold as a hedge against inflation.

Crude oil rose for a second day on signs of growing energy demand and Norway shut two offshore platforms. Gold prices also rose after breaching the 14-day moving average, said David Gornall, head of foreign exchange and bullion at Natexis Commodity Markets Ltd. in London.

``The oil price is one of the reasons gold has spiked higher,'' Frederic Panizzutti, a senior vice president at MKS Finance, one of Switzerland's four bullion refiners, said in an interview today.

Gold for immediate delivery traded $8.70, or 1.5 percent, to $588 an ounce as of 1:47 p.m. in London, after earlier adding as much as $10.10. The 14-day moving average stands at $583.66. Gold has gained 2.4 percent this week.

Gold futures for December delivery rose $11.20, or 1.9 percent, to $591.50 an ounce on the Comex division of the New York Mercantile Exchange. Prices are 25 percent higher than a year earlier. A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.

``You have technical funds buying gold right now,'' said Michael Guido, director of hedge-fund marketing at Societe Generale in New York. ``The oil market rallying over $1 push gold over $584.''

``Gold is following oil tick for tick.''

Gold rose nearly two percent on Friday tracking firmer oil, but pared gains in late trade on a stronger dollar that prompted some investors to take profits.

The market has been choppy and moved by an average $13 a day in a week, tracking moves in the currency and energy markets.

James Steel, metals analyst at HSBC Bank, said investors got a lead from the rally in oil, while good physical demand in India, the world's top gold consumer, also supported the market.

"The oil rally has given everybody another reason to buy gold. I am near-term bullish. I don't think gold (will go) over $600 an ounce but I think it will be strong," he said.

Spot gold hit a high of $589.00 an ounce, the highest since Oct 3, before dipping to $586.20/587.20 by 1451 GMT, against $578.10/579.10 late in New York on Thursday.

Oil extended its rebound, from a 2006 low, after oilfield shutdowns in Norway and a surprise drop in fuel inventories in top consumer the United States.

The dollar rose after a preliminary reading of a key consumer sentiment survey for October came in higher than expected.

Gold is seen as a hedge against inflation and often moves along with oil prices, but the metal generally has an inverse relationship with the dollar.

"The downside in both oil and the dollar is now very limited and we strongly believe that both are set to reverse direction in the month ahead, thus providing the gold market with a clear element of direction over the medium term," Barclays Capital said in a report.

BULLISH IN LONG TERM

Analysts remained bullish about gold's outlook in the long term. Gold producers are also looking at ways to strengthen their positions.

Barrick Gold Corp. again extended its $1.3 billion hostile offer to acquire NovaGold Resources Inc. , saying the deal was more attractive than when it was first announced.

Barrick, the world's largest gold producer, made an unsolicited $1.29 billion offer for NovaGold in July, as it sought to consolidate development projects in Alaska and British Columbia. NovaGold in August urged investors to reject the offer, saying it undervalued the company.

In other precious metals, platinum traded near a six-month low despite buying interest from jewelers and auto makers. It was quoted at $1,072/1,077 an ounce, against $1,069/1,074.

Persistent selling in Japanese futures dragged down the spot price to $1,060 on Wednesday, its lowest since early April.

"Japanese investors have been selling platinum in TOCOM because of weakness in the gold price. They don't seem to understand there's actually good demand from jewelers and auto makers," said a dealer in Tokyo.

"But I am sure platinum will recover even faster than gold because we have this autumn demand ahead of Christmas. I would say $1,060 will be the bottom price," he said.

Palladium rose to $311/314 an ounce from $303/308, while silver was little changed at $11.33/11.40.

Large veins of gold in the Pacific island country of Papua-New Guinea may have been deposited in a relative blink of time, geologically speaking.

With an estimated 1,300 tons of gold, the Ladolam deposit is one of the largest and youngest gold fields in the world, according to researchers led by Stuart F. Simmons of the University of Auckland, New Zealand.

The gold precipitated from hot volcanic water rising up from below.

Ladolam, on Lihir Island, is the only known active hydrothermal gold deposit and could have been built up in 55,000 years or less at the current rate of deposit, Simmons reports in Friday's issue of the journal Science.

Simmons and Kevin L. Brown of GEOKEM, a New Zealand-based geochemical company, sampled water in deep wells below the gold deposit.

"Our results indicate a steady upward flux of gold, as a consequence of geothermal heat and mass transfer ... were critical in forming the Ladolam deposit in a compact volume of rock in a short period," the researchers said.

They sampled water from deep beneath the gold field and found gold, sulfur compounds and other minerals dissolved in the hot fluids. The minerals are deposited when the water rises toward the surface where the pressure is less and it cools.

The gold is deposited as the water cools from about 480 degrees Fahrenheit to about 300 degrees, they reported. About 50 pounds of gold is deposited per year, they calculated.

Christoph A. Heinrich, of the Swiss Federal Institute of Technology in Zurich, noted that deposits from water circulating in the Earth's crust have produced valuable deposits of not only gold but also such minerals as zinc and copper.

An understanding of this process is key to finding and developing these deposits, said Heinrich, who was not part of Simmons' team.

He suggested that the Ladolam deposit might have formed even more quickly than suggested by Simmons. The deposit is located in an extinct volcano and might have formed when the mountain erupted causing a sudden release of pressure on the mineral-rich water beneath.

The study was funded by New Zealand's Foundation for Research Science and Technology.

Gold futures rose Thursday to close above the $580-an-ounce mark for the first time in three days, finding support in a weaker dollar and slightly higher oil prices.

"A marginally lower dollar (beneficial for gold) was ... offset by absence of developments on the geopolitical front and by news reports that South African production has finally broken a declining streak in output and may be on the rebound," said Jon Nadler, an investment products analyst at bullion dealers Kitco.com.

But "seasonally strong physical demand continues to provide good support and will go some way to slow any retreat," according to James Moore, an analyst at TheBullionDesk.com.

Gold for December delivery closed up $3.80 at $580.30 an ounce on the New York Mercantile Exchange. On Wednesday, the contract squeezed out a small gain as traders weighed its safe-haven attraction given the threat of North Korea's nuclear activities against weak energy prices and a firm dollar.

Gold moved higher after data showed the U.S. trade deficit widened by 2.7% in August to a record $69.9 billion. The reading surprised economists, who were expecting the deficit to narrow to $66.4 billion from $68 billion in July. See Economic Report. The data sent the dollar lower against major rivals.

Adding more support for prices Thursday, consultancy firm GFMS reiterated its mildly bullish stance for gold once again, "as it envisions a return to the low $600's before year-end and then to a possible $700 within six months' time," said Nadler.
But Dale Doelling, chief market technician at Trends in Commodities, said metals traders are becoming increasingly frustrated with gold's reluctance to break in either direction.

"Maybe we'll see the majority of the long-term bulls finally throw in the towel which would push prices sharply lower for a session or two," he said.
Oil prices gained Thursday, but remained under $58 a barrel on the heels of a rise in U.S. crude supplies and a decline in distillate inventories.

December silver futures closed up 5 cents at $11.38 an ounce and January platinum finished up $1.80 at $1,074.60 an ounce, but December palladium dipped $1.05 to close at $307.90 an ounce and December copper fell by 2.35 cents to end at $3.3865 a pound.
On the supply side, gold inventories were down by 32,001 troy ounces to 7.82 million troy ounces as of late Wednesday, according to Nymex data. Silver supplies were unchanged at 105.2 million troy ounces and copper supplies rose by 786 short tons to 22,354 short tons.

In equities, metals-mining shares closed higher to mirror gold's gains.
However, Meridian Gold shares bucked the trend to close down 0.9% at $23.58. The mining company late Wednesday revised its El Penon gold production estimates and said third-quarter operating earnings will be reduced by $6.7 million in one-time transition costs.

Gold prices edged up, finding support from Asian demand and a dip in the US dollar.

Analysts warned, however, that sagging oil prices could continue to weigh on gold as they reduce the metal's appeal as a hedge against inflation.

At 1.58 pm, spot gold, which earlier hit a high of 576.40 usd an ounce, was quoted at 574.45 usd, up from from the 572.40 usd level reached when the COMEX market closed in New York yesterday.

Other precious metals were also higher.

Spot silver was up at 11.28 usd against 11.25 usd, platinum rose to 1,072.50 usd against 1,069.00 usd, while palladium climbed to 307.00 usd against 302.00 usd.

'Crude should continue to weigh on gold today. We expect it to continue its recent fall as US inventory data released this afternoon should be up while oil demand should continue to slow down,' said Dresdner Bank analyst Sara-Frederike Weisser.

She added, however, that a weakening dollar
could bolster gold in its fight against falling energy prices.

The dollar was weaker today after data from the US Commerce Department showed the trade deficit hit an all-time high in August as record imports of oil swamped a solid gain in US exports.

Weisser noted that the dollar failed to capitalise on the relatively hawkish minutes of the Federal Open Market Committee's latest policy meeting yesterday.

She added the Fed's Beige Book survey, scheduled for release at 7.00 pm, 'might not be as positive as the FOMC minutes were. This could weaken the dollar' further, in turn adding to gold's appeal.

Shares of gold producers moved higher Thursday, as gold prices traded upward.

Barrick Gold Corp. shares added 34 cents to $28.75 in afternoon trading on the New York Stock Exchange. Newmont Mining Corp. shares rose 50 cents to $41.59, while Glamis Gold Ltd. shares climbed 71 cents, or 2 percent, to $35.84.

The December contract for gold traded higher just before close, up $3.60 to $580.10 per ounce on the New York Mercantile Exchange.

The price of oil rose 10 cents to $57.69 a barrel on Nymex, a day after closing at the lowest level since December 2005.

Meanwhile, the dollar was down against major currencies.

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Meridian Gold Inc. (MDG)on Wednesday lowered its 2006 total gold production outlook after it revised production estimates of its El Penon mine and said its third-quarter results would be hurt by a charge of $6.7 million.

The gold miner said, in a statement, it now expected 2006 total production of 235,000 ounces of gold, compared with the 260,000 ounces it expected earlier.

Meridian had in July said the El Penon mine was in a year of transition as the company moved to newer areas in the mine and expanded plant capacity.

The company said the third-quarter charge related to transition costs associated with the recruitment of Edward Dowling as chief executive officer and president, and the transition of Brian Kennedy to chairman of board as of Jan 1, 2007.

Gold saw choppy trade in Europe on Wednesday, recouping earlier losses but lacking the drive to crack a key level above $580 an ounce, while platinum bounced off a six-month low.

Spot gold moved up to $578.80 in late afternoon trade, before retreating back to $575.80/576.55 by 1527 GMT, modestly up from $573.70/574.70 late in New York on Tuesday.

"The market is a bit confused at this stage. North Korea certainly triggered some reaction but that met with selling," said Frederic Panizzutti, analyst at MKS Finance.

"The bulls are not sure if this is the right level to enter the market for a move back toward $600 and the bears are not sure if this is the right level for a move to $550. For the time being, we expect gold to remain in a range."

Worries that North Korea would conduct a second nuclear test kept nerves on edge on Wednesday as Japan, facing Chinese and Russian reservations about the scope of U.N. sanctions, pressed for a stern response to Pyongyang.

Ignoring U.N. warnings, North Korea announced on Monday that it had conducted its first nuclear test. It said a U.S. "threat of nuclear war and sanctions" forced its hand.

Mining firms in South Africa, the world's biggest producer of gold and platinum, were given a boost on Wednesday as the government slashed rates of proposed mining royalties to lessen the impact of a controversial tax based on company revenues.

FAILURE AT $580

Bullion has tried three times in the past six days to crack $580 an ounce, but has been thwarted each time.

"There are still many shorts out in the market after several weak days and we don't rule out that some covering might set in if this psychological level is broken, which would encourage further buying," said Alexander Zumpfe, trader at Heraeus.

"With the dollar not moving so much against the euro at the moment and oil rather stable after it moved up from its lows, there seems to be a lack of follow-through buying right now."

Oil steadied after falling below $58 a barrel as OPEC haggled over the details of an output cut and the West's energy watchdog cut its oil demand growth forecast. Weaker oil prices lower gold's appeal as a hedge against inflation.

Another trader said he thought only North Korea was supporting prices.

"Left to its own devices, we would be targeting a break of $570. So, to be honest, I think the sidelines are the best place to be and you trade a break of $580.50 or $570," he said.

In other precious metals, platinum fell to its lowest since early April at $1,060 an ounce, tracking fund selling in Japan. It later pared losses to trade at $1,066/1,071, up from $1,063/1,068 late in New York.

Palladium was unchanged at $304/309 an ounce, while silver rose to $11.33/11.43 an ounce from $11.14/11.21.

Gold futures climbed above $580 an ounce Wednesday morning, attempting to recoup the prior day's loss as oil prices edged higher after a group of key oil producers finally agreed to cut production.

"If gold does indeed deserve to close out the year on a high(er) note, it will do so only after having proven to its faithful that it does retain its security blanket attributes after all," said Jon Nadler, an investment products analyst at bullion dealers Kitco.com.

"It is not that gold's fundamentals are shaky; it just needs to re-align itself with one or more traditional drivers of demand and exhibit better correlation," he said.
Gold for December delivery climbed by $6.60 at $576.20 an ounce on the New York Mercantile Exchange, after losing $6.60 in the previous session.

On Wednesday, Edmund Daukoru, president of the Organization of the Petroleum Exporting Countries who also serves as Nigeria's oil minister, said OPEC has agreed to cut its global production by 1 million barrels per day in a move to boost prices, but were still discussing how to share the cut, Dow Jones Newswires reported.

Meanwhile, other metals followed gold's lead higher on Nymex, with the exception of platinum, which saw its January contract fall by $3.70 to $1,072 an ounce.

December silver futures was up 17 cents at $11.39 an ounce, December palladium added $2.40 to $304 an ounce and December copper tacked on 2.25 cents to trade at $3.4005 a pound.

On the supply side, gold stocks were unchanged at 7.86 million troy ounces as of late Tuesday, according to Nymex data. Silver supplies fell by 32,713 troy ounces to 105.2 million, but copper supplies rose by 370 short tons to 21,568 short tons.

In equities, metals-mining shares traded on a mixed note after closing more than 1% higher on Tuesday.

Eldorado Gold is aiming to float shares in Hong Kong next year to bankroll a quest for projects in China, the firm's top executive said Tuesday.

The gold miner, listed in Toronto and the United States, will start trial operations at its first mine in China by the end of this month, making Hong Kong an attractive option to help finance more mainland projects.

Eldorado Gold joins a lengthening list of junior gold miners pondering tapping Hong Kong, Asia's largest bourse after Japan, for capital to fund projects in China or elsewhere.
Sino Gold, the first foreign firm to mine gold in China, said Monday it had appointed Morgan Stanley to advise it on a listing in Hong Kong.


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Eldorado president and chief executive Paul Wright would not disclose the size of any planned offering and said the firm had not appointed a listing adviser.
Wright said he would meet with the Hong Kong stock exchange to discuss a listing plan and seek clarification on listing requirements.

"Our views on business are very long term," he said when asked whether the firm might scrap the plan if gold prices fell.

Gold reached a 26-year high of US$730 (HK$5,694) an ounce in May but the price has dropped since, partly in tandem with weaker oil prices. It traded at US$577.30 Tuesday afternoon.

Shares in two Hong Kong-listed mainland gold producers, Fujian Zijin Mining Industry (2899) and Lingbao Gold (3330), have risen this year on the back of strong prices. Eldorado Gold operates gold mining projects in Brazil, Turkey and the mainland and has a market capitalization of about US$1.4 billion.
I
ts mainland project in northwestern Qinghai province is operated by a joint venture 90 percent-owned by Eldorado Gold and the remaining 10 percent split equally between two Chinese shareholders.

The Tanjianshan mine is expected to produce about three tonnes of gold in 2007, out of Eldorado's expected total output of 11 tonnes next year, Wright said. Total gold production is expected to come in at 5.5 tonnes to six tonnes this year.

The mainland plant can process 800,000 tonnes of ore per year.
Wright said the average grade of the mine was 4.5 grams of gold per tonne of ore - relatively low compared with world-class mines.

Reserves would allow that size of production for 11.5 years, with an estimated cash operating cost of US$235 an ounce, he said.
That compares with the world's top gold producer, Barrick Gold, which saw an average cost of US$227 per ounce last year.

Eldorado Gold is exploring for more reserves at its Qinghai site while seeking other gold mining projects in the province and in other western provinces.
"When we are entering a new country, it is our intention to be here for a long period of time to build a multimine business," Wright said.

Gold pared gains after touching a one-week high on Tuesday as it tracked oil and the dollar, and lacked the demand to move up sharply on positive fundamentals, traders said.

Prices had been hovering in a range of $559-$581 per ounce for almost a week, way below last month's peak of $640.25 and a 26-year high of $730 in May.

"It looks really good from the fundamental side, but there just doesn't seem to be enough buying coming through to drive prices much higher," said Michael Widmer, metals analyst at Calyon Corporate and Investment Bank.

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"That's worrisome, because if you have got a generally bullish environment and prices are not doing anything, that's not very good."

Spot gold rose as high as $579.60 an ounce before falling to $574.50/575.50 by 1137 GMT, against $576.00/577.10 in New York late on Monday.

Dealers said gold would normally have jumped on news such as the nuclear test by North Korea and slowing U.S. economic growth, but the metal was stuck in a range.

Oil prices fell after rising above $60 a barrel as OPEC worked out the details of an expected one million barrels per day production cut, with gains checked by a lack of Saudi supply curbs to Asian refiners.

The metal also came under pressure because of a stronger dollar, which hit a three-month high against the euro.

"After a period of consolidation and when the market nervousness about North Korea settles down, gold should continue with its weak trend, potentially looking towards initial support at $570 before heading lower into the $540s," Standard Bank said in a daily report.

World powers condemned North Korea after it said it had conducted its first underground nuclear test, and Washington sought harsh U.N. sanctions that could further isolate the communist state.

"It seems clear that North Korean testing has had only a very limited sustainable impact on the gold price ... But we do not see North Korea as a major driver of the gold price in the near term barring any military escalation," John Reade, analyst at UBS Investment Bank, said.

In other precious metals, silver fell to $11.18/11.25 an ounce from $11.28/11.35 late in New York.

Platinum fell to $1,080/1,085 from $1,082/1,087 an ounce, while palladium was at $301.50/306.50 an ounce, versus $300/304.

In industry news, Italy's jewellery export volumes are likely to fall 5-10 percent this year due to a sharp fall in second quarter exports and volatile gold prices, an industry expert said.

Gold jumped 1.5 percent on Monday as safe-haven buying intensified after North Korea said it had conducted its first nuclear test, but pared gains later.

However, higher oil prices underpinned the market and analysts said gold had potential to advance in the near term.

"Oil prices have firmed a little bit and also we saw the nuclear test from North Korea overnight," John Reade, precious metals analyst at UBS Investment Bank, said.

"I think there are lots of reasons why you want to be long in gold at the moment ... also because we continue to see extremely strong physical demand," he said, referring to long positions held by investors who expected prices to rise.

Spot gold hit a high for the day of $580.75 an ounce in early European trade and was quoted at $576.60/577.60 by 1217 GMT, against $572.40/573.40 in New York late on Friday.

Gold, which is seen as a safe asset in difficult times, reacted on news that North Korea conducted an underground nuclear test on Monday.

The White House branded the act as "provocative" and said it expected the U.N. Security Council to take immediate action.

"Everybody is a bit tense. When the U.S. wakes up, you may see rhetoric from them. Gold may even rise to $585," a dealer in Singapore said.

NORTH KOREAN IMPACT

News of the North Korean test, as well as plans by the Organization of Petroleum Exporting Countries to cut production, helped crude oil jump about one percent to above $60 a barrel.

Gold is often seen as a hedge against inflation and has tracked oil in recent weeks. It dropped to its lowest in more than three months at $559.40 on October 4, when crude oil tumbled to an eight-month low.

"Today's outlook for gold doesn't seem as bad as in the last days... Negative bias could only come from the dollar but technically there does not seem to be a lot of upside potential for the latter," Dresdner Kleinwort said in a daily note.

The euro firmed slightly against the dollar after hitting a 2-1/2-month low on Friday after U.S. non-farm payrolls data showed upward revisions to past employment growth and left the labor market looking tighter than previously thought.

Other precious metals tracked gold. Silver rose to $11.27/11.34 an ounce from $11.08/11.15 late in New York.

Platinum gained to $1,082/1,087 an ounce from $1,073/1,078 in New York. Palladium rose to $300/304 an ounce from $296/300 late in the U.S. market.

Norilsk Nickel , the world's largest nickel and palladium miner, raised its forecast for 2006 platinum and palladium output due to improved recovery of metal from its ores.