Daily Gold Update

Source: Reuters

New York— Gold futures in New York settled unchanged and still near three-week lows on Monday in subdued, currency-driven dealings ahead of U.S. trade data later this week, traders said.

Gold for June delivery on the New York Mercantile Exchange's COMEX division was flat from Friday's finish at $426.90 an ounce, after trading from $427.40 to $425.40.

On Friday, investment fund selling clobbered gold to its lowest close since April 15, after robust U.S. April payrolls data raised expectations that interest rates may rise further, which would tend to support the dollar and depress gold.

As the focus shifted from Friday's payrolls data to international trade data due Wednesday, gold was tracking currency markets but was not looking particularly strong, despite some bargain hunting by physical players.

"Mixed currency moves on speculation of a (Chinese) yuan revaluation has kept gold in a mixed mood today," James Moore at TheBullionDesk.com said in a report.

The euro was a tad firmer and up from three-week lows at around $1.2823 by midafternoon. The dollar rose against the Japanese yen as China remained silent about its plans for the yuan.

A stronger dollar makes U.S. currency-denominated gold more expensive for traders holding foreign currencies.

But, gold still has "upside" potential and $500/oz bullion remains a realistic target for later in 2005, due to wide U.S. trade and budget deficits and growing demand for oil, which potentially could fuel inflation, Moore said.

A hefty amount of fund liquidation in COMEX gold was seen in the latest weekly CFTC traders' commitments data issued on Friday. The data showed the net fund long position sank to 107,728 lots as of May 3 from 137,777 contracts on April 26.

Tim Evans at IFR Markets said that a surging dollar and the risk of oil prices falling from recent highs could be the scenario that prompts more speculative selling and drives gold prices to new lows for the year.

Evans put chart support in COMEX June gold at $424.50, $423.50 and $414, with longer-term targets seen at $405 and then $380.

Resistance was at $432.50, $450.80 and $462.90, he said.

Spot gold last was worth $425.80/426.55 an ounce, quite close to Friday's late New York quote at $425.80/6.60. Monday's afternoon fix in London was at $425.50.

Silver climbed when futures seemed to be less vulnerable to selling after CFTC data showed the fund net long stance fell 20,507 lots to 19,858 contracts.

COMEX July silver rose 11.5 cents to end at $7.08 an ounce, after dealing within a range from $6.94 to $7.12. Spot silver was at $7.04/07, up from Friday's late quote at $6.92/95. Monday's fix was $6.955.

Moore said silver should hold to a $6.85-$7.15 range but added that pressure on gold could prompt more spec selling.

On the board at NYMEX, July platinum gained $3.80 to end at $878.60. Spot platinum reached $875/879.

June palladium rose $1.85 to $195.65 an ounce. Spot palladium was quoted at $191/195.