Daily Gold Update

Source: Reuters

New York— COMEX gold slipped on Monday but stayed within last week's range as the dollar firmed in anticipation of another increase in U.S. interest rates at Tuesday's Federal Reserve meeting.

Dealers said the benchmark December contract (GCZ4: looked comfortable between $400 and $410 before the Fed makes its announcement, due after gold closes Tuesday. They said gold could tread water until August leading economic indicators come out on Thursday and durable goods orders Friday.

"We're all looking and waiting to see what the Fed does," said a floor broker. "That's tomorrow afternoon, so we're looking at two days of pretty much quietness."

December gold settled 60 cents easier at $407.00 an ounce, trading from $407.60 to $405.30. Dealers lamented the light volume, which was estimated at paltry 21,000 contracts, hardly half of Friday's official 40,043 contracts.

The 200-day moving average was technical support around $405.50, while worries about global Islamic extremism and the violent situation in Iraq provided safe-haven support.

The contract has consolidated since falling from $416.80 on Aug. 20, its priciest since the April highs, to $396.90 on Sept. 8.

Despite expecting the Fed to tighten again this week, traders seemed confident that the central bank will go slow hiking further, based on signals that it is not worried about overheating as the economy emerges from a summer slow patch.

A measured Fed approach was just one reason for investors to shy away from buying the dollar aggressively. Indeed, gold cut morning losses as the dollar backed off its highs.

"The U.S.'s ability to fund its external deficit is becoming particularly onerous, which should eventually unravel the U.S. dollar and hence boost the gold price," Deutsche Bank said in its latest commodities report.

"However, for as long as the greenback remains resilient to these trends, we expect the gold price will remain vulnerable to speculative liquidation," the report read.

Commodity funds liquidated last week when their net long position in gold fell to 54,856 contracts from 62,143 contracts the previous week, according to a CFTC report late Friday.

Spot gold slipped to $405.00/5.70, down from $405.50/6.25 late Friday. London's afternoon fix was $404.30.

COMEX December silver fell 0.80 cent to $6.28 an ounce, trading in a $6.295-$6.225 range. Spot silver last was shown at $6.23/26, compared to the previous close at $6.22/25. The fix was $6.205.

NYMEX October platinum fell $1.20 to $841.90 an ounce. Spot platinum was at $835.00/840.00.

December palladium slipped 60 cents to $208.25 an ounce. Spot palladium was last at $203.50/209.50.