WELLINGTON (Dow Jones)--Bouts of profit-taking and physical buying kept gold prices trapped in a tight band in Asian trading Wednesday, with recent volatility having pushed some investors to the sidelines. The medium-to-long-term outlook remained bullish, however, as bankers are holding their price forecasts above $1,900 a troy ounce despite a steep correction last week. Spot gold gained 15.5% between July 21 and Aug. 30, deriving much of its momentum from uncertainty over global growth that ravaged equity markets, which witnessed some of the steepest falls since the 2008 collapse of Lehman Brothers. In the same period, the Dow Jones Industrial Average lost 9.2%. Gold rallied by about 2.6% Tuesday due to a poor reading by the Conference Board, a private research group, which said its index of U.S. consumer confidence sank to its lowest level since April 2009. At 0557 GMT, spot gold was at $1,832.80/oz, down $2.30 from the late New York price. Gold touched a high of $1,912.29/oz on Aug. 23 and then slipped by more than $200 in the same week. The volatility "has been driving traders nuts," a Singapore-based trader said, calling last week's correction "scary." "Buying activity has been limited so far Wednesday," a Shanghai-based trader said adding that there has been some interest from jewelry makers and other buyers. Traders and analysts said they expect gold buying to pick up in September, with gold buying likely to increase in the Middle East following the end of the Muslim fasting month of Ramadan. Gold buying also usually increases in India ahead of the festive and wedding season in October. Chief Executive Ross Norman of London-based bullion dealer Sharps Pixley said he sees 2011 as a "dramatic" year for gold, with the precious metal likely to approach $2,000/oz before the end of the year. Meanwhile UBS has kept its one-month gold price target at $1,950/oz, according to media reports. A weaker U.S. dollar is also spurring gold prices, a fund manager based in Adelaide said, adding that volatility in dollar terms is going to increase and the likelihood of gold hitting new heights is very likely. Traders said that though palladium remains rangebound, there could be some upward pressure in the near term based on exchange-traded fund buying. Barclays Capital said net fund length in Nymex platinum rose to its highest level since a peak hit in early February this year on the back of fresh longs, while holdings in platinum exchange-traded products rose Friday to take the total metal held in trust across seven products to a record high. At 0557 GMT, spot silver was at $41.28/oz, down 7 cents with platinum and palladium each trading $1 lower, at $1,850/oz and $772/oz, respectively. -By Arpan Mukherjee, Dow Jones Newswires; 64-4-471-5990; arpan.mukherjee@dowjones.com

Source