By: Angela Sharda

London 10/10/2012 - Gold was rangebound on Wednesday morning in Europe in low volumes and quiet trading conditions.

Spot gold was last at $1,763.71/1,763.75 per ounce, down just 69 cents from Tuesday’s close and just above its 10-day low of $1,759.94 from Monday's session.

"We remain in consolidation mode," David Govett, head of precious metals at Marex Spectron, said, pegging support at $1,740 and resistance at $1,800. "The dollar will be the main driver for short-term moves."

The yellow metal has traded in a tight $6 band this morning, continuing to consolidate after dropping from an 11-month high on Friday.

Since then, gold has broadly followed the euro, which dropped to a one-week low at 1.2832 against the US dollar this morning from above 1.3 before the weekend. It was last at 1.2864.

Last week's positive jobs figures, which raised hopes that Federal Reserve intervention through a third round of quantitative easing (QE3) will be short-lived, have boosted the US currency, while the euro has been under pressure from news that Spain may resist asking Brussels for a bailout.

“Gold is not performing as a safe haven at the moment and the dollar has replaced it,” Govett said. "Despite QE3, the dollar has held up well and has limited the impact of this policy on the precious metals."

The IMF has identified the eurozone as the largest threat to the global economy, urging policymakers to strengthen financial and fiscal ties within the region or risk a potentially massive flight of capital from its struggling banks, it said its latest Global Financial Stability Report.

Still, data from the region this morning ha surprised on the upside. Italian industrial production month-on-month for August came in at 1.7 percent from a predicted 0.5 percent and the French equivalent at 1.5 percent beat a predicted -0.2 percent.

Policy developments in Europe and the US are likely to determine gold's direction, with next week’s EU leaders’ summit to be closely watched.

Holdings in gold exchange-traded funds have extended their run of fresh record highs - the funds followed by FastMarkets were up another 2.6 tonnes on Tuesday from Monday, reaching a fresh all-time high of 2,595.32 tonnes.

The other precious metals were largely steady, although platinum was down around half a percent at $1,674.25-1,684.25 per ounce, down $8.75 on Tuesday’s close. Silver was last at $33.84-33.90, in line with Tuesday’s close of $33.83 and palladium was up 40 cents at $652.30-658.30.


(Editing by Mark Shaw)