By Arpan Mukherjee Of DOW JONES NEWSWIRES WELLINGTON (Dow Jones)--Gold extended its overnight gains in the Asian session Thursday despite a strong dollar with traders expecting a modest uptick in prices in the near-term underpinned by tensions between in Iran and the West, traders said. Lingering concerns about the euro-zone debt crisis, however, could cap a substantial move higher, they said. At 0525 GMT, spot gold was at $1,615.10 a troy ounce, up $2.60 from its previous close. The metal has already gained about 3.2% since the start of the year. "There has been some safe-haven buying in Asia," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong. Leung said he expects gold to test $1,650/oz, while some analysts said a convincing breach of the 200-day moving average of around $1,632/oz will be crucial before gold could move higher. Gold gained Wednesday after reports that European Union countries had agreed in principle to launch an oil embargo on Iran. While discussions continue over the timing and the implementation of the embargo, Iranian officials have threatened to retaliate by targeting Western ships operating in the Strait of Hormuz, a major route for oil shipments. While some analysts expected gold's safe-haven allure to start shining if geo-political tensions continue to escalate, the yellow metal's recent behavior as a risky asset, could cap its upside if risk aversion continued, a Singapore-based analyst said. However, most analysts remained convinced about the yellow metal's medium to long term outlook. "The underlying tendency for (precious) metals is to move higher this year as there is a general fear of a lot bad macroeconomic things happening," Ric Deverell, head of global commodities research at Credit Suisse said at a conference in Singapore. The bank remained bullish on gold and silver in the next 12-months. In silver, ScotiaMocatta said in a note that it expected "significant support" near the 2011 low of $26.10/oz. Mitsui Global Precious Metals said in a note that Chinese media reports of the country's commerce ministry planning to encourage spending on vehicles and electrical appliances in the coming years could help to increase demand for silver and platinum group of metals. At 0525 GMT, spot silver is at $29.33/oz, up 17 cents, while platinum was at $1,424/oz, up $7 and palladium at $653/oz, up $4. "Platinum producers are facing a severe margin squeeze, which limits the downside and it remains cheap relative to gold," Standard Chartered analysts said in a note. The house said it expects palladium to benefit from improved demand from the automotive sector, which should continue to expand despite problems in the wider industry. (Surabhi Sahu in Singapore contributed to this article) -By Arpan Mukherjee, Dow Jones Newswires; 64-4-471-5990; arpan.mukherjee@dowjones.com

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