Daily Gold Update

Source: Reuters

New York— U.S. gold futures closed at their lowest since mid-April on Monday, pressured by investment funds selling in trade thinned by overseas holidays, while silver sank to a 2-3/4-month low, dealers said.

Fund pressure dragged down the metals complex, though strong physical buying from Asia, particularly India, where it is wedding season, lent support to gold at lower prices, said Andy Montano, director of precious metals at ScotiaMocatta.

Much of the activity in commodities came through New York and Toronto as London's markets were closed for May Day.

China was to be shut all week for a labor day holiday, and Japan will close from Tuesday to Thursday for public holidays known as Golden Week.

"The volume of fund selling overwhelmed what the physical market could absorb," Montano said. "And, there was a little bit of movement in price with the currencies as well, with the euro coming off at midmorning."

June delivery gold on the New York Mercantile Exchange's COMEX division tumbled $5.60 to $430.50 an ounce, its lowest close since April 18, after trading from $436 to $429.50.

The funds might have been moved to sell some positions after a sharp boost in their net long stance in gold in the latest week lifted futures to overbought territory, dealers said.

Commitments of Traders data from the Commodity Futures Trading Commission issued Friday showed the net fund long exposure jumped to 137,777 contracts as of April 26, from 114,392 lots on April 19.

Selling also intensified when the dollar rose after a report said U.S. manufacturing activity slipped last month. Traders bet the U.S. economy is the best investment option amid what appeared to be a global slowdown.

Data from the Institute for Supply Management showed the industry group's index of national factory activity falling to 53.3 in April from 55.2 in March, amid a drop in new orders and deterioration in hiring.

Wall Street analysts had predicted the survey would show little change from last month.

Also playing a part in trading was uncertainty ahead of Tuesday's meeting of the Federal Reserve, which was widely expected to raise interest rates for the eighth consecutive time to reach the 3 percent level.

The euro fell a two-week low at $1.2838 in the afternoon.

Technically, however, gold was still supported at the bottom of its $430 to $440 trading range, despite falling below initial support at $433, traders and analysts said.

Spot gold last was quoted at $429.25/430.00 an ounce, below Friday's close in New York at $434.30/5.00.

COMEX July silver finished 6.5 cents lower at $6.875 an ounce, its weakest close since Feb. 9, after trading from $6.995 to $6.81. Spot silver priced at $6.83/85, versus the last New York close at $6.87/90.

On the NYMEX, July platinum managed a slight gain of $1.40 to end at $870 an ounce. Spot platinum reached $868/872.

June palladium fell $4.25 to $193.65 an ounce, a two-month closing low. Spot palladium hit $193/196.