Daily Gold Update

Source: Reuters

New York— Gold futures in New York closed at a three-week peak on Monday on a mixture of speculative buying and strong demand for bullion, while silver also firmed and hovered close to 12-week highs.

August gold on the COMEX division of the New York Mercantile Exchange settled up $2.60 at $428.40 an ounce, its priciest close since May 11, after dealing in a range from $424.30 to $429.50.

Fund buying and trader short covering helped reverse a weak start in gold in the Far East overnight, after physical purchases emerged during a move to lower prices, traders said.

Meanwhile, gold appeared to have decoupled from the euro, which it had been tracking closely over the last four years because of its role as the main dollar-alternative currency.

Gold rose over the last three days while the euro itself moved sideways and its underlying trend still looked weak.

Any move above 350 euros per ounce of gold was seen probably sparking a broader rally in the gold market.

"Gold is starting to firm up against all the currencies. Technically, that is looking very good," said a metals broker at a futures commission merchant. "Keep an eye on gold at above 350 in euro terms."

Gold has traded above that level only a handful of times since the euro made its debut in January 1999 and each time the move was a fleeting one. The last instance was on April 2, 2004. Monday's last quote was at 347.08/347.67.

The dollar fell against the euro and yen Monday in the wake of last week's gloomy U.S. jobs data, but the euro remained vulnerable to concerns about the political and economic future of the European Union.

The euro was up 0.3 percent at $1.2273 at midafternoon, having hit an eight-month low of $1.2157 last week.

"We'll look for some resistance in the near-term between $427 and $431.50 (in COMEX August gold) but recognize that the market could eventually stretch to higher levels," said Tim Evans, senior commodity analyst at IFR Markets in a report.

Evans put next resistance at $440. Support lurks down at $416.80 and $415.80, he said.

Spot gold fetched $426.00/6.70 an ounce, compared with $423.40/4.10 at Friday's close. Monday's London afternoon fix was at $425.85.

July silver rose 3.0 cents to $7.54 an ounce, after trading $7.465 to $7.62. Futures rallied to a 12-week high at $7.63 last Thursday on speculative buying amid expectations of a silver exchange-traded fund coming to market soon.

Spot silver reached $7.50/53, against $7.45/48 previously. It fixed at $7.46.

July platinum gained $5.70 to $881.20 an ounce, a level last seen on May 11. Spot reached $876/880.

September palladium rose $5.25 to $191.65 an ounce. Spot traded to $188/193.