By Arpan Mukherjee Gold moved higher in Asian trading amid a weaker dollar and renewed talk of the possibility of another round of stimulus measures, but the market is less than convinced that the current rally could be sustained for long, traders said Wednesday. At 0435 GMT, spot gold was at $1,626 a troy ounce, up $9.10 from its previous close. A softer dollar helped trigger some investment demand, although physical demand continued to be subdued, a Hong Kong-based trader said. Dollar-denominated commodities become more affordable to holders of other currencies when the greenback retreats. The euro was at $1.2508 compared to $1.2452 late Tuesday in New York. Gold is likely to consolidate its gains of last week ahead of U.S. Federal Reserve Chairman Ben Bernanke's testimony to the Congress Thursday, Phillip Futures analyst Lynette Tan said. "Any stimulus announcement will be helpful to gold... If not, gold could revisit the psychological support at $1,600/oz again," she said. Recent reports have suggested that disappointing economic data, weak financial markets and the ongoing European crisis have made policy action at the U.S. central bank a possibility once again. The U.S. Federal Open Market Committee is scheduled to meet June 19. Analysts said any policy easing by the European Central Bank may support gold which usually gains from additional liquidity in the system. "There is a lot of uncertainty this month and a lot depends on how the major events turn out," Ms Tan said, adding that if Greece exits the euro, there could be downward pressure on gold. Ms Tan said she expects gold to remain in the $1,600/oz-$1,680/oz range ahead of the election in Greece and the policy-setting committee's meeting later this month. After a much talked-about G-7 conference call that did not yield any positive news, "gold may be marking time ahead of key Chinese data this weekend, the Greek election mid-month and worries about the Spanish banking system," ANZ analysts said in a note. "Chart patterns are looking neutral in the near-term." In the case of silver, ANZ said there is "little in the way of directional clue," with downside support seen around $26/oz. At 0435 GMT, spot silver was at $28.83/oz, up 30 cents, while platinum was at $1,448.50/oz, up $14.50 and palladium was at $621.25/oz, 75 cents. While gold has recovered after hitting a new low for the year, other precious metals with industrial applications have failed to keep pace, reflecting weak economic outlook, the Hong Kong-based trader said. Write to Arpan Mukherjee at arpan.mukherjee@dowjones.com

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