Daily Gold Update

Source: Reuters

New York— U.S. gold futures settled a shade higher on Monday, and above Friday's near three-month lows, boosted by light trade and speculative buying amid a softer U.S. dollar versus the euro, floor traders said.

Gold for February delivery inched up 20 cents to $419.70 an ounce on the New York Mercantile Exchange's COMEX division, after dealing between $418.40 and $422.30.

Futures finished Friday at their lowest mark since Oct. 13 at $417.10, after the dollar jumped 5 cents last week from a recent all-time low against the euro.

But chart-based selling on Monday in the dollar ended its New Year's rally and boosted gold by making the dollar-denominated metal more attractive to non-U.S. buyers.

"There is short covering and trade buying due to the higher euro," said one COMEX gold trader. "But this just may be a dead cat bounce as long as we stay below the 100-day moving average at $426-$427."

Even though crude oil rallied to a five-week high Monday, speculators were not buying gold on that move, though it did cap selling at gold's highs, the trader said.

COMEX gold has lost about 4 percent in value since the start of the year, after rising almost 6 percent in 2004 on safe-haven buying driven by acute geopolitical tensions, dollar weakness and inflation fears due to higher oil prices.

Midafternoon in New York, the dollar was down at $1.3090 per euro, after having risen to $1.3023 on Friday when U.S. Treasury Secretary John Snow called for a stronger dollar. The greenback fell to an all-time low against the euro at $1.3667 on Dec. 30.

Traders said they were turning their attention to U.S. November trade balance data due on Wednesday, with the figure forecast to show a deficit just slightly below the record $55.46 billion shortfall recorded in October.

The Commodity Futures Trading Commission's Commitments of Traders data showed the net fund long position in COMEX gold futures fell to 73,243 lots as of last Tuesday, Jan. 4, from 98,753 lots at the previous weekly report.

This is well off from the record net long position of 173,241 contracts set Dec. 7, according to Citigroup Smith Barney research.

"Viewed in this light, gold prices have been remarkably resilient, likely reflecting the willingness of fabricators and Asian investors to accumulate on weakness," Citigroup Smith Barney said in a weekly metals report.

IFR Markets analyst Tim Evans pegged support in February futures at $417.70, and then at $417.10, $411.30/50 and $400, with resistance seen up at $432.90 and $446.20.

COMEX March silver rose 0.2 cent to end at $6.45 an ounce, trading from $6.42-$6.50. Spot silver was flat from its prior close at $6.41/44. Monday's fix was at $6.47.

NYMEX April platinum gained $6.20 to $846.90 an ounce. Spot platinum last fetched $846/850.

March palladium rose $7.60 to $191.60 an ounce. Spot reached $188/193.