Daily Gold Update

Source: Reuters

New York— Gold futures in New York slipped off a near four-week peak Tuesday as market players took profits after Monday's short-covering rally in precious metals, dealers said.

August delivery gold on the COMEX division of the New York Mercantile Exchange fell $1.70 to close at $426.70 an ounce, after trading from $429.60 to $426.20.

"We're in the process of a little consolidation" in gold and silver, said James Quinn, commodities commentator at AG Edwards & Sons, who added that fears of slowing jewelry demand in Asia due to recently higher metal prices also weighed on prices.

The retreat in price partially erased Monday's $2.60 gain, which had lifted futures to their strongest close since May 11 at $428.40.

Dealers said gold got support at lower levels, however, from the United States restating its opposition to any proposed sales of International Monetary Fund gold to finance the elimination of Third World debt.

British finance minister Gordon Brown, who has led a proposal to use IMF gold, said Tuesday he was confident of a package with 100 percent debt relief for the world's poorest countries in the next few days.

Spot gold was at $424.40/5.10 an ounce, off from $426.00/6.70 at Monday's close. Tuesday's London afternoon fix was $424.10.

Some dealers and analysts felt a gold price move to 350 euros per ounce could trigger a rally in the gold market, after the metal recently seemed to be decoupling from the currency. Gold in euros was trading at about 346 euros.

"If gold breaks above 350 euros per ounce, that will signify the market is shunning all paper currencies," said Jes Black, a hedge fund manager with Black Flag Capital Partners LLC in Hoboken, New Jersey.

If gold were to rise above that level, "what you would see is a mad rush into gold. … It could very well spark a very large rally in gold," Black said.

The euro pared earlier gains to trade at $1.2268 at midafternoon. It hit an eight-month low of $1.2157 last week.

The dollar lost ground after comments from Federal Reserve chief Alan Greenspan added to uncertainty about the U.S. interest rate outlook. Greenspan said "new forces" were behind the unusual environment of low global long-term interest rates and that this was unlikely to change soon.

July silver fell 9.5 cents to $7.445 an ounce, dealing from $7.565 to $7.42. Silver shot to a 12-week high at $7.63 last week on speculative buying amid expectations of a silver exchange-traded fund coming to market soon.

Spot silver fetched $7.40/43, compared with $7.50/53 previously. It fixed at $7.525.

Platinum and palladium were held in check after a fund-led boost on Monday, as prices ran into trade selling at above $880 an ounce and $190-193 an ounce, respectively, brokers said.

July platinum fell $1.30 from three-week highs to $879.90 an ounce. Spot traded at $876/880.

September palladium declined $1.65 to $190 an ounce. Spot traded to $187.50/192.50.