Daily Gold Update

Source: Reuters

New York— Gold surged to a one-month high in U.S. trading on Tuesday after a series of explosions in India's financial hub of Mumbai killed more than 100 people, traders said.

The metal extended early gains fueled by dollar weakness and a stronger oil price after it bolted above technical resistance at the top of a recent $620-to-$635 an ounce trading range.

A series of explosions hit at least seven packed commuter trains during the rush hour on Tuesday in India's financial hub, Mumbai, killing more than 160 and injuring hundreds.

Investors commonly flock to the gold market in times of turmoil as the metal is seen as a classic "safe haven" asset.

"That's new fund buying," said a New York floor trader. "We believe some of that was triggered after the bombings in India."

"Mumbai was the catalyst, and the funds are returning here," said another trading source, George Gero, vice president at RBC Capital Markets Global Futures.

Spot gold hit a low of $621 an ounce due to profit-taking from last week's one-month high of $637, but later climbed as high as $643 — a peak since June 5.

It fetched $642.10/644.10 in U.S. afternoon trade, vs. $624.00/625.50 late on Monday.

August delivery gold at the New York Mercantile Exchange's COMEX division closed up $17.00 or 2.7 percent at $643.10 an ounce.

Concerns over Iran's atomic ambitions also continued to support gold, dealers said.

The United States led pressure on Tuesday for Iran to face U.N. action after it defied calls for an early response to an offer of incentives aimed at ending a nuclear standoff.

In other markets watched by gold players, the dollar fell against the euro to $1.2765 by midafternoon.

U.S. crude futures rose above $74 a barrel.

A lower dollar usually encourages buying of dollar-denominated gold, while the metal is also viewed as a classic hedge against inflation when oil is costly.

"This market is in a move higher," Peter Hillyard, head of metals sales at ANZ Investment Bank, said earlier on Tuesday.

"The market seeks reassurance, maybe from inflation news, global deficits, geopolitical tensions — all of those are reasons that the market looks for," he said. "There is still more money to come into precious metals."

Dealers said traders were expected to focus later this week on U.S. economic data on international trade and consumer sentiment, due on Wednesday and Friday, respectively.

In industry news, China's gold output rose 12 percent in the first half of this year to 110 tonnes, the nation's top planner estimated, as consolidation and new mine development allowed the country's largest firms to produce more.

Turkish gold jewelry demand rose in the last two months due to lower and steadier world prices and the revival was seen continuing in the second half of the year, Turkey's leading jewelry retailer said.

In other precious metals, platinum prices rocketed up to $1,242/1,247 an ounce from $1,219/1,225 previously, while palladium was at $324/330 an ounce from $314/320.

Silver rose to $11.53/11.63 an ounce from $11.05/11.15 in the U.S. market on Monday, when it fell to its lowest since June 30 at $10.87 an ounce.