Daily Gold Update

Source: Reuters

New York— U.S. gold futures closed lower on Monday as traders cashed in on last week's rally to 2005 highs, spurred by a recovery in the dollar, dealers said.

Silver slid to a one-week low, pressured by losses in gold and the euro, and platinum and palladium were little changed.

Gold for April delivery at the COMEX division of the New York Mercantile Exchange ended off $5.20, or 1.2 percent, at $441.60 an ounce, after trading from $446.70 to $440.70.

Prices backpedaled after finishing Friday at $446.80, gold's highest close since Dec. 28, as trading continued to be linked to currency moves and the euro dropped below $1.34.

Still, many analysts felt gold's up-trend remained intact, as any short-term pullback would prompt buying close to the $440 area.

Tim Evans, analyst at IFR Markets, said that although gold surged nicely last week, the market faced stiff resistance at the Dec. 29 high of $449.

"This suggests we may see a period of consolidation or technical correction now rather than a clean run for the $460.50 (16-1/2-year) peak of Dec. 2," he said in a report.

"Without some fundamental news to cut off the rise, though, gold could just be in the middle of a run comparable to the September-December run," he said. "It may be technically overbought for a very good reason — it is trending sharply higher."

The latest weekly Commitments of Traders data from the Commodity Futures Trading Commission showed net speculative long accumulation in COMEX gold futures for the fourth week in a row.

Friday's data showed the fund net long position rose to 70,477 contracts as of March 8 from 56,681 lots on March 1.

The dollar was up across the board as traders bought back a cheaper dollar after a poor U.S. trade figure on Friday, while higher yields on U.S. Treasury debt also lent support.

With no significant U.S. data Monday, the market was bracing for a U.S. capital flows report on Tuesday and Wednesday's current account data for a read on sentiment toward the dollar.

"We continue to be believers in gold, noting its unusual resilience during a period of economic strength," said Citigroup/Smith Barney in a research note.

"Gold's ability to generate headway in euro and yen terms, however, remains a critical credibility test," Citigroup added.

The firm's year average forecasts are $425 for 2005, compared to $409 last year and a year-to-date average of $427, and $450 for 2006/07.

At midafternoon, the euro had eased to $1.3356 from $1.3459 late on Friday. A stronger dollar makes dollar-denominated gold more expensive for non-U.S. investors.

Spot gold last was quoted at $440.75/1.50, versus Friday's New York close at $445.50/6.20. London's afternoon fix on Monday was at $441.95.

May silver futures fell 16 cents to end at $7.41 an ounce, after moving from $7.565 to $7.375. Spot fetched $7.35/38, against $7.51/55 previously. The fix was at $7.475.

April platinum rose 30 cents to $870.50 an ounce. Spot platinum last was worth $868/873.

June palladium shed $1.95 to end at $201 an ounce. Spot palladium was at $195/200.