Daily Gold Update

Source: Reuters

New York— U.S. gold futures posted a nine-day low on a settlement basis on Wednesday as traders took profits after prices hit a five-week high previously, dealers said.

In other precious metals, speculative liquidation also hit silver in rollover-dominated trade, and platinum fell on worries over substitution by some automakers, while palladium was the only gainer.

June delivery gold fell $4.90 or 1.12 percent to $434.10 an ounce on the New York Mercantile Exchange's COMEX division, after trading from $438.80 to $433.20 — a session low last seen on April 20.

Fund selling swept the yellow metal lower after it closed Tuesday at its loftiest level since mid-March at $439, as the large specs in the market pared back long positions.

Open interest rose 11,037 lots to 302,084 lots on Tuesday's $3.20 gain in benchmark June futures.

"I would say it is speculative liquidation in the metals, but in the longer-term, gold is just seeing a minor setback. It is not a major reversal," said Frank Aburto of FC Stone.

Traders also were watching external factors that tend to influence direction, such as crude oil prices, U.S. economic data and currency moves.

Technically, gold still has upside potential but there is risk that gains made in the last week could fizzle if momentum stalls, said Heraeus, a precious metals refiner, in a report.

"Gold really needs to clear $440 to avoid a correction back to $425," it said. "We favor a further move to the upside prompted by strength in other commodities (especially oil) and further declines in the U.S. dollar."

Surprisingly soft U.S. durable goods data for March was not enough to break currencies out of prior ranges. Durable orders fell 2.8 percent, versus expectations of up 0.3 percent.

The euro slid to $1.2942 from $1.2960 on Tuesday.

On Thursday, economists expect first-quarter U.S. economic growth to fall to 3.6 percent from 3.8 percent in the prior quarter.

The May 3 U.S. Federal Reserve meeting on interest rates also remains a key focus for gold traders, analysts said. The Fed has lifted official rates by a quarter percentage point seven times since June 2004.

Aburto said he viewed support in COMEX June futures at $430 and resistance at the $440 level.

Spot gold dropped to $432.50/3.00 an ounce, way below Tuesday's close in New York at $436.85/7.60. Wednesday's afternoon fix in London was at $434.35.

Silver trading featured specs rolling May futures positions into next active July before first notice day for metals delivery on Friday.

COMEX May silver lost 12.0 cents to close at $7.135 an ounce, dealing from $7.26 to $7.085. July 12.1 cents to $7.181. Spot silver hit $7.12/14, off from the last New York close at $7.23/25. The fix was at $7.215.

NYMEX July platinum ended at $870.90 an ounce, down $10.70 on the day. Spot platinum touched $867/872.

Engelhard Corp. said two major European carmakers will start production next month on its new diesel automobile catalyst technology. The process, in which vehicles will be fitted with a three-catalyst system, enables palladium to be substituted for one-third of the more expensive platinum used on one of the catalysts.

June palladium gained $1.00 to $203 an ounce. Spot palladium last was quoted at $200/203.