Spot gold prices moved to end Tuesday in New York unchanged from Monday, despite a sharp drop in the price of crude oil.
WTI for May delivery fell 2% to $64.64 per barrel at the Nymex on news that Tehran and London are holding talks about resolving Iran's capture of 15 British service personnel in disputed waters just south of Iraq.
"[Oil is] selling off on hope that there will be a diplomatic
breakthrough," said one New York energy trader to Bloomberg.
Physical gold for immediate delivery, on the other hand, held steady to end the day at $664.50 per ounce.
"We are range-bound ahead of Easter," reckons David Holmes, head of precious metals Dresdner Kleinwort in London.
"The market is long and new buyers are reluctant to enter into the market until we break through some resistance levels – which in my mind would be $670."
(Why did gold fail to track oil lower on news of the UK-Iran talks? Click here to learn what really drives gold prices higher...)
Gold trading is set to slow further this week according to Reuters, as the Easter holidays draw near.
Hong Kong will close on Thursday for the Ching Ming festival. London will be shut for the next two business days, Friday and Monday.
"The market seems to be hanging around $655 to $668," reckons the head of Leung Gold Dealers in Hong Kong.
"Below $660 there's some physical-interest buying. There's some seasonal demand at this level."
The world's largest physical bullion market, India is set to increase its traditional gold buying over the next four weeks.
The Akshaya Trithiai festival, celebrated across the southern states at the end of April, will coincide with the spring wedding season.
More bullish news for long-term gold prices also came today from Peru.
Previously the world's fifth largest producer, Peru reported a 25% drop in gold output in the year to Feb.
Production of silver, zinc and copper rose. Total gold output was cut by lower productivity at the Yanacocha mine, which is majority-owned by Newmont Mining, the world's second largest mining company.
Yanacocha suffered a drop in ore grades, as well as a series of missed production deadlines.
Wall Street analysts now forecast that Newmont's revenues in 2008 will slip from this year. The company countered last week by announcing record new exploration spending.
But whatever this extra cash does for Newmont's reserves of gold-in-the-ground, it's unlikely to increase long-term world gold mining output.