LONDON, Aug 12: The gold market hovered below the key $330 mark on Tuesday and dealers said this failure had to break above that level soon could signal another return to the downside.

Gold prices had rallied last Friday in response to a sharp decline in US stock and bond markets on Friday.

But Wall Street's better performance on Monday declines the chances that gold could summon up enough support to push higher for now, dealers said.Gold was fixed at $327.60 an ounce, virtually unchanged from Monday. But prices were off the firm New York close of $328.20-328.70.

The market will watch US Economic data due out later this week for signs that inflation is on the rise, analysts said. "Any signs that inflation is picking up and give the market further support...In any case there is no point getting too positive unless there is a convincing break of resistance at $330," brokers said.

Turnover in the precious metals was light in early trading, lulled by the August slowdown, and any sharp moves would unlikely to emerge during European trading hours, dealers said.

But the platinum group metals were sharply lower after Monday's news that a week-old strike at South Africa's mine had ended after a deal was struck with more than 400 striking workers at the platinum refineries.

Supplies of platinum and palladium remain tight as long-delayed exports from chief producer Russia have been small and demand is strong, dealers said.Platinum was last indicated at $436.00-439.00, down $8 from Monday's London close.

Palladium, which had soared to 17-year highs last week, was down slightly as well at $227.00-232.00, compared to $231.60-234.60 at Monday's close.Silver prices were stuck in a narrow range and last quoted just one cent firmer at $4.43-4.45 an ounce.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.