Gold rattled around the $645 mark in New York after closing London sharply higher from Monday's weakening prices.

"Gold is still trading in a broad range but overall, customers seem to be buying the dips," reckons one metals analyst. "The market is more inclined to move on the upside than the downside at the moment...

"The market had been testing the downside and when some natural buying came into the market, that pushed up prices."

Gold's failure to hold above $650 however – the level it broke on Thursday – may encourage short-term traders to quit the market for the time being, says Michael Widmer, director and head of metal research at Calyon in London.

Widmer also thinks traders will be watching for news of economic growth in the US this week. A slew of data is due on Thursday and Friday. Before then, the US Federal Reserve will announce its latest interest-rate policy at 19:15 GMT on Wednesday.

"Most gold investors will be focused on any signs of inflation," says Widmer. But don't wait for Dr.Bernanke to speak or for CNN to pick apart the personal income and spending data...jobless numbers and welfare claims...auto and truck sales...factory orders or hourly earnings reports.

The US money supply is rising faster than any time since 2001, back above 12% year-on-year according to one analysis today. With each Dollar losing value as the flood of new Dollars rises higher, gold remains the ultimate defence for investors against excessive growth in the money supply.

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