Daily Gold Update

Source: Reuters

New York— Gold futures in New York closed lower and below a previous five-week peak on Tuesday, as investors cashed in on gains after U.S. data eased inflation fears a bit, dealers said.

Gold for August delivery fell $1.80 to settle at $429.30 an ounce on the New York Mercantile Exchange�s COMEX division, completely erasing Monday�s $1.80 gain, after trading between $431.10 and $428.30.

Futures have been tracking crude oil primarily in the last several days, with players looking at inflationary factors rather than focusing on currencies, traders said.

�We�re looking at some profit-taking after oil came down a little, but the market hasn�t done a whole lot,� said Frank Aburto of FC Stone in New York.

High oil prices often give gold a boost as traders can use the metal as an inflation hedge. U.S. crude was down 42 cents at $55.20 per barrel at midafternoon.

Heavy liquidation overnight in Tokyo gold futures also weighed on the COMEX market, dealers said.

Estimated gold volume was 40,000 contracts, against the previous tally of 64,481 lots. Open interest rose 2,650 lots to 256,005 lots as of Monday.

Monday�s session high of $432.60 in August futures was the market�s loftiest level since May 6.

In two U.S. reports that may calm inflation fears, retail sales dropped a surprisingly large 0.5 percent in May�the sharpest fall in almost a year�and producer prices fell a steeper-than-expected 0.6 percent.

Analysts said, meanwhile, that bullion prices have loosened their tight correlation with the euro/dollar rate, showing strength despite a stronger U.S. currency.

�The safe haven money is moving from the euro to gold and other commodities,� said Peter Schiff, chief global strategist at Euro Pacific Capital. �This has major implications for global interest rates, the dollar and the U.S. economy. It has been a long time since the dollar, gold and oil have moved up together.�

The euro slumped at $1.2050 at midafternoon, close to a nine-month low against the dollar.

The common European currency is down about 10 percent this year, due to sluggish regional growth and concerns about political cohesion after French and Dutch voters recently rejected the EU constitution.

Euro-priced gold was quoted at 354 euros on Tuesday after shooting Monday to a record high above 356.

Chartists put resistance in key COMEX August gold at $432 and $435 with support at last Thursday�s low of $423.

Spot gold changed hands at $426.75/7.50 an ounce, below Monday�s New York closing quote of $428.75/9.50. The London afternoon fix was $426.85.

Silver trading was uninspired after a recent rally to above $7.60 per ounce fizzled out last week.

COMEX July silver rose 1.5 cents to end at $7.28 an ounce, dealing within a $7.24-to-$7.315 range. Spot silver stuck near $7.24/27, above Monday�s close at $7.22/25. It fixed at $7.255.

On the board at NYMEX, July platinum settled 20 cents firmer at $874.70 an ounce. Spot platinum hit $873/877.

September palladium was down 50 cents at $187 an ounce. Spot fetched $183/186.