NEW YORK, April 29 (Reuters) - Platinum on the New York Mercantile Exchange (NYMEX) slumped to four-month lows Tuesday morning on technical selling, while gold was weighed down by a firm U.S. dollar and higher equities, dealers said
"The platinum market is actively trading. Much of it is technically oriented, with the dealers turning scale-down buyers," said AG Edwards commodity commentator James Quinn at the NYMEX floor.
But with spot platinum supported at $600 an ounce and NYMEX July futures trading near $597, Quinn said the market may have entered oversold territory.
NYMEX July platinum by 1005 EDT had extended Monday's drop by $12.20, or 2 percent, to stand at $595.50 an ounce, the weakest active-month price since Jan 5. Its session range was $608.50 to $593. July's contract low is $552.50.
Spot was traded at $604.00/609.00, below Monday's late quote at $617.00/622.00.
Analysts said the potential fall-out from Severe Acute Respiratory Syndrome (SARS) had affected market sentiment, although some traders questioned that.
Some market watchers fear SARS is undermining key Chinese consumption of platinum amid reports that jewelry buyers in Shanghai and Beijing, terrified of catching the deadly virus, are staying home.
But ScotiaMocatta in a daily report on Tuesday, said, "There have been stories that SARS has affected demand in Hong Kong and China, causing the price to fall. This is about as accurate as the reports that SARS has been contained; if anything demand has increased."
Gold futures on NYMEX's COMEX division fell as the U.S. dollar firmed against the euro , helped by higher equities and a rebound in U.S. consumer confidence.
"The dollar tested support at 1.09.50 (versus the euro) and I think that's why a little pressure came on the gold this morning," said a trader at a precious metals refiner.
"We are still in this range between $330 and $335/336 and that's where we're going to stay unless there's any news."
June futures were down $2.80 at $332 an ounce, in a range of $334.70-$331.30.
Spot gold was at $331.55/2.25, from its previous late New York quote at $334.55/5.25. London dealers fixed the morning spot reference price at $332.60.
The Conference Board said Tuesday U.S. consumer confidence soared in April after four months of decline as Americans took an upbeat view of the economy after war in Iraq ended within weeks and casualties were limited.
The Consumer Confidence Index rose to 81.0 in April from a downwardly revised 61.4 in March. The survey began April 1 before the major hostilities in Iraq were over and finished on April 22, nearly two weeks after Baghdad fell to U.S. forces.
Traders also have said that overseas physical buying this week helped prop up gold, even with the Dow Jones industrial average and the U.S. dollar holding firm.
JP Morgan technical analysts said Monday's test of the $330 level in spot looked to be corrective, which could leave gold free to rally to a target zone of $338/340 in the coming days.
"Hold longs or buy dips as a result," JP Morgan said in its Daily Technical Strategist.
July silver shed 2.0 cents to $4.575 an ounce, moving from $4.595-$4.56. Spot silver fetched 4.55/57, near its previous closing level at $4.58/59. Tuesday's fix was at $4.555.
JP Morgan technical analysts said spot silver still held within a "bull channel" between $4.52-$4.70.
NYMEX June palladium rose $1.15 to $151.75 an ounce. Spot palladium traded at $147.00/152.00.