Daily Gold Update

Source: AFX

WASHINGTON — Metals futures closed mixed Monday, with copper and silver shrugging off an early case of the doldrums while gains in the US dollar kept gold in check.

Investors' expectations that higher US interest rates could spell renewed interest in a stronger dollar overshadowed gold's traditional status as a safe-haven bulwark against inflation. The greenback rallied against the other major global currencies.

Gold for June delivery closed down 2.30 usd at 426 usd an ounce on the New York Mercantile Exchange.

"The direction of the dollar continues to hold the key," said analysts at London-based Standard Bank, adding that further weakness in the euro "would be extremely negative for gold give the yellow metal's 99 pct correlation" to the European common currency.

Providing a lift for the dollar were Saturday comments by St Louis Fed president William Poole, who said the financial markets' reaction to the most recent tightening of monetary policy by the Federal Reserve "made a lot of sense."

Poole's remarks, said TheBullionDesk.com analyst James Moore, "reinforced speculation the US will accelerate interest rate increases," spurring the dollar's gains.

Moore also noted that the spring meeting in Washington of the International Monetary Fund is now two weeks away. Gold traders have been on edge about the possibility of the IMF putting up for sale some of its gold reserves in conjunction with a plan to provide debt relief for developing countries.

Also on Nymex, the silver contract took a page from copper and pulled itself out of the red.

May silver traded at 7.024 usd an ounce, closing up 2.4 cents on the day. May copper added 1.05 cents to finish at 1.495 usd a pound.

However, platinum and sister metal palladium traded in lockstep with gold, managing no such recovery. July platinum fell 7.10 usd to close at 855.70 usd an ounce, while June palladium ended at 200.10 usd an ounce, off 1.75 usd.

Meanwhile, silver again stood out in the latest inventories data compiled by Nymex.

Silver inventories dropped to 102.08 mln troy ounces as of the close of business last Friday, down more than 1.54 mln troy ounces on a net basis compared to the previous day.

In addition, Nymex said copper fell 385 short tons to 42,963 short tons, while gold inventories slipped by 96 troy ounces to 5.96 mln troy ounces.

In equities, the pressure on indexes tracking mining stocks never relented.

The Philadelphia Gold/Silver Index moved down 1.7 pct to end at 92.46 points, while the CBOE Gold Index retreated by 2.2 pct to 80.87 and the Amex Gold Bugs Index dropped 2.4 pct to 198.30.