Daily Gold Update

Source: Reuters

New York— U.S. gold futures settled at 2005 highs on Thursday as the dollar remained weak against key currencies, although a drop in crude oil prices took some shine off the yellow metal, dealers said.

Gold for April delivery at the COMEX division of the New York Mercantile Exchange rose 50 cents to end at $443.40 an ounce — its highest close since Dec. 28 — after roaming a session range between $440.70 and $443.70.

Gold drew support from the dollar holding at just above two-month lows versus the euro, because of the extremely tight dollar/gold relationship, market sources said.

A weaker U.S. currency usually lifts dollar-denominated gold by making it cheaper for buyers holding foreign currencies.

"We are expecting gold to keep on climbing," said Sprott Securities analyst Jed Richardson.

Gold's other supportive driver was the recent surge in oil prices, which was generating more speculative interest in commodities overall, Richardson added.

"Oil is the one commodity that everyone focuses on, and when it goes, you see the rest follow suit," he said. "After oil and gold recently took a breather, everybody is getting a chance to get back into the game, and I think we'll see a push higher because there are a lot more players this go-round.

"We're looking for an average price of $450 for the year and it looks like we're on our way there," Richardson said.

COMEX brokers looked for gold futures to top $445 soon, followed by $450 and possibly even the $475 level after that. In early December, gold hit 16-year highs near $460 an ounce.

Dealers pegged support at $438 or so, which was a breakout point on the way up early this week.

Midafternoon in New York, the euro was at $1.3443 , not far from an earlier peak at $1.3456. That was its highest since Jan. 4 and 2 cents away from December's record highs.

Comments from Japan's Prime Minister raised more fears about Asian central banks diversifying their foreign exchange reserves away from the U.S. currency.

Also, with worries about the U.S. economy figuring highly in markets, players were awaiting Friday's U.S. trade data.

The report was expected to show the deficit widened to $56.50 billion in January from December's $56.40 billion.

Crude oil fell after surging on Wednesday to $55.65 a barrel, just 2 cents from October's all-time high at $55.67, eroding confidence in the dollar's purchasing power and burnishing gold as a hedge.

NYMEX nearby oil futures were down 2.2 percent at $53.55 in late trading.

Spot gold last priced at $442.00/442.75, versus Wednesday's New York close at $440.00/0.70. London's afternoon fix on Thursday was at $440.90.

COMEX May silver 11.3 cents to $7.527, after moving between $7.67 and $7.495. Wednesday's peak at $7.68 was silver's highest since Dec. 8, when it was falling from multiyear highs above $8 an ounce.

Spot silver reached $7.48/51, against the previous close at $7.58/61. It fixed at $7.52 in London.

June palladium slid $3.65 to $203.80 an ounce, still simmering down after hitting a three-month high at $219 on Friday. Spot palladium was quoted at $198.50/203.50.

April platinum went down $6.40 to $870 an ounce. Spot platinum reached $866.50/871.50.