Daily Gold Update

Source: Reuters

NEW YORK, Oct 3 — COMEX gold futures slid into negative territory after a set of robust economic readings launched U.S. Blue Chips to triple-digit gains and reversed the dollar's losses, undermining the safe-haven buying enjoyed by gold earlier Thursday, traders said.

Then gold recouped some of its losses when Wall Street's initial enthusiasm was tempered by a more sober reading of the unchanged manufacturing figures. But the yellow metal's return to the black was tentative and subject to stock market impulses, traders said.

"The stock market is what everyone myopically is keeping their eyes on — gold, bonds, you name it. So, if there's no movement in the stock market, there is going to be no movement in everything else," said one gold broker.

By mid-morning, gold for December delivery <0#GC:> on the New York Mercantile Exchange's COMEX division was up $1.20 gains at $324.0 an ounce, trading $322.80 to $325.50.

Estimated early COMEX gold volume was 8,000 lots.

Spot gold traded at $322.80/3.30 versus Wednesday's New York close of $321.75/2.15. Bullion dealers in London fixed the spot reference price up a tad at $322.70.

Gold futures started with sharp gains as falling European stock prices, a dollar at one-month lows, and ongoing parries over a United Nations resolution to inspect Iraqi arms.

But better-than-forecast manufacturing and service sector figures sent the major U.S. equity gauges soaring. Gold's strong start quickly deteriorated into losses as the data cast doubt on worries that the economic recovery may have stalled.

Stock market gains and gold's losses came after data showing the September U.S. service sector picked up its growth pace to 53.9 from an 50.9 in August. September's reading was higher than forecasts and the eighth straight month of growth for service businesses, which account for about 80 percent of U.S. GDP.

U.S. factory orders for August came in unchanged, beating a forecast 0.5 percent decline. The new orders and inventory components both showed improvement over July readings.

December gold's early rally fell short of the $326.2 September high resistance level. The mid-morning price drop was supported above the $322.10 session low, and next support is Wednesday's low of $320.80.

COMEX December silver <0#SI:> gained 0.5 cent to $4.49 an ounce and traded between $4.49 and $4.525. Spot silver changed hands at $4.48/50, up a from $4.47/4.49 at Wednesday's close. Spot silver was fixed at $4.4875 Thursday, up 0.25 cent.

NYMEX January platinum <0#PL:> was $5 lower at $558 an ounce. Spot platinum was last at $560/565 an ounce.

December palladium <0#PA:> lost $9.72 to $317 an ounce. Spot palladium was last at $313/325 an ounce.

AGE Note: Gold has been range bound for the last several trading sessions trading primarily between $320 – $325 an ounce. The gold market is having difficulty rising above $330 – but when it does – it will probably pop higher $10 – $20 very quickly.