Daily Gold Update

Source: Reuters

New York— COMEX gold futures on Wednesday ended at a nine-day high on U.S. stock market and dollar weakness in early afternoon, with safe-haven gold also gaining amid uncertainty over Washington's next steps to press its case against Iraq, dealers said.

December gold <0#GC:> on the COMEX division of the New York Mercantile Exchange finished $3.60 higher at $321.80 an ounce, after trading between $318 and $322.50.

Gold futures and bullion moved back above the key $320 level after constructive closes on Tuesday, although COMEX benchmark December gold failed to muster the strength needed to challenge the seven-week high it hit at $325.50 on Sept 9.

Spot gold was last quoted at $320.25/0.75 an ounce, up from $317.00/50 at Tuesday's New York close. London bullion dealers fixed the afternoon spot reference rate at $318.70.

George Parrill, a director at ScotiaMocatta in Toronto, said that soft equity markets, dollar weakness and doubts about the United States' next move on Iraq remained gold's key movers, although cautious trading was keeping prices rangebound.

"The close at just above $320 (basis spot) is the area where we seem to run into some speculative selling," he said, adding that many traders moved in and out of the market between $315 and at just above $320.

"It is difficult to say when the gold market will break out of this range. Let's see what the other markets do overnight," Parrill said.

The Dow Jones industrials moved off their earlier lows after gold closed, as some investors stepped in to buy equities, despite disappointing corporate earnings forecasts and jitters over the possibility of war with Iraq.

The euro rose on the day versus the greenback at $0.9784 from $0.9739/44 late Tuesday.

The Bush administration sees Iraq's offer this week to readmit U.N. arms inspectors without conditions as a ploy to weaken the U.S. drive to oust Saddam Hussein. The White House continues to push ahead with contingency plans for a military conflict.

President George W. Bush said he would keep pressing for U.N. moves against Iraq despite the doubts of key members, and would propose within days a congressional resolution authorizing him to take action.

Against this background, gold is seen as a hard asset that holds its value in times of global political turmoil. It rose some $40 to $400 as oil prices spiked after Iraq invaded Kuwait in 1990, only to fall back once the Gulf War started.

Final estimated COMEX gold volume was 44,000 contracts, versus the 31,436 lots tallied on Tuesday.

Open interest was down 1,150 lots at 164,036 lots.

December silver <0#SI:> settled up 4.2 cents at $4.64 an ounce, after moving from $4.585-$4.665. Spot silver last traded at $4.61/63, up from the prior close at $4.58/60 and the fix at $4.58 an ounce.

Estimated turnover was 10,000 lots, from 7,848 previously.

NYMEX October platinum <0#PL:> rose $4.80 to $554.20 an ounce. Spot platinum was last at $552/557.

December palladium <0#PA:> closed flat at $335.50 an ounce. Spot palladium fetched $331/337.