Daily Gold Update

Source: Reuters

New York— U.S. gold futures ended a choppy session unchanged on Wednesday, as speculative selling was matched with physical buying at lower prices and the market mostly stayed glued to currency moves, dealers said.

Futures calmed down in late trade after a brief rally at midday on reports that the White House and Capitol were evacuated amid a feared threat from an aircraft.

U.S. authorities later gave the "all clear" and allowed government staff to return to offices, and gold fell flat.

"Gold's holding up pretty well in light of the strength in the dollar, which I think had something to do with the evacuations in Washington," said David Rinehimer, director of commodities research at Citigroup Global Markets.

June delivery gold on the New York Mercantile Exchange's COMEX division ended flat from Tuesday's close at $427.90 an ounce, after trading between $426 and $429.30.

The dollar gained after a much narrower-than-expected U.S. trade deficit in March tempered concerns about external financing problems for the economy.

A morning report showed the trade gap contracted to $54.99 billion in March from a revised $60.57 billion in February and well below economists' forecasts for a $61.5 billion deficit.

The euro was off 0.5 percent from Tuesday at $1.2808. A strong greenback often depresses dollar-denominated gold as it gets costlier for buyers using foreign currencies.

"There is spec selling out there, but there is also some physical demand coming into the market at around the $426 area," said a New York gold desk trader.

Analysts pegged gold as stuck within a range from around $420 to $440.

Merrill Lynch said in a report it was maintaining its $440/oz average spot gold price forecast for 2005, based on its view that the dollar will weaken this year, with the euro seen hitting $1.38 in September.

Its estimate that demand will exceed supply by 200 tonnes in 2005 also was supportive to the market's long-term outlook, but gold could weaken first during the summer as Indian jewelry demand and European fabrication demand wanes.

"Post the Indian wedding season (late May), gold prices usually start declining. We think bullion could decline to the $410/oz level by July," Merrill said in a report.

Spot gold last was worth $427.00/427.80 an ounce, near Tuesday's late New York quote at $427.00/7.50. Wednesday's afternoon fix in London was at $426.10.

COMEX July silver slid 2.0 cents to end at $7.095 an ounce, dealing from $7.135 to $7.005. Tightness has been seen in the nearby months due to physical demand, traders said.

Spot silver priced at $7.05/08, vs. $7.09/11 previously. The fix was at $7.08.

On the board at NYMEX, July platinum climbed $1.30 to close at $881.20 — off from an earlier near-two-month high at $885.80. Spot platinum reached $880/885.

June palladium fell $2.10 to $193.55 an ounce. Spot palladium was quoted at $191/194.