Daily Gold Update

Source: Reuters

New York— COMEX gold found its footing on Monday after Friday's harrowing fund bailout, saved by a jump in the euro even as investors reconsidered the gold sector in the wake of last week's welcome news on U.S. job creation.

December gold GCZ3 ended up $3.30 at $373.30 an ounce, moving from $370.50 to $374.30. The contract tumbled to a 5-1/2 week low at $367 on Friday, ending down $13.70 after speculators threw in the towel on long positions when prices broke below the psychological $380 level.

"The euro helped and I think it's just taking a little breather. I mean it was pretty radical on Friday," said a gold trader at a commercial bank.

Estimated volume was 40,000 lots, after an official 115,634 on Friday that was reminiscent of the record turnover during gold's short-covering spike on Sept 28 1999.

The euro moved back above $1.17, making gold even cheaper for European bargain hunters. Other flight to quality assets like Treasury bonds also steadied.

Dealers took heart from a 1 percent recovery in the XAU Index of North American gold and silver mining stocks .XAU . Gold equities led the 2003 bullion advance that topped at 7-year highs 11 days ago.

The XAU fell 4.5 percent on Friday, worse than the 3.5 percent decline in gold's price. Dealers fear that another fall in equities could magnify losses in the underlying metal.

The gold selling snowballed on Friday after U.S. September nonfarm payrolls were reported 57,000 higher, the first increase since January, while the unemployment rate stayed at 6.1 percent, defying predictions of a rise.

Speculators recently accumulated the biggest long position ever on the COMEX, buying gold while worries about the U.S. economic recovery weakened the dollar and the dangerous Middle East situation burnished its safe-haven premium.

"Friday was a one-day wonder," said Leonard Kaplan, president of Prospector Asset Management. "Nothing has fundamentally changed in the precious metals at all. All we saw was a technical liquidation, period. I remain very bullish."

The CFTC said in its weekly Commitments of Traders report Friday that the net speculative long position in gold fell to 95,188 contracts as of last Tuesday from 107,668 on Sept 23.

"Some of the funds were already heading for the exits ahead of Friday's debacle," wrote IFR/Pegasus analyst Timothy Evans. "In addition to the relatively high remaining vulnerability to lower prices, the flow of selling is also bearish."

Spot gold XAU= closed at $372.45/3.15, up from $369.35/0.05 late Friday. The afternoon fix in London was at $371.30 an ounce.

December silver 0#SI: ended off another 2.0 cents at $4.815 an ounce, extending Friday's 26.5 cents slump in a $4.905 to $4.745 range. Spot silver XAG= fell to $4.78/80 from the last close at $4.82/84. The fix was at $4.835.

NYMEX January platinum 0#PL: fell $5.90 to $707.60 an ounce, correcting from Friday's rally to a contract high at $723.00. Spot XPT= was quoted at $708.00/713.00.

December palladium 0#PA: firmed 55 cents to $210.75. Spot XPD= fetched $204.50/210.50.