Daily Gold Update

Source: Reuters

New York— COMEX gold succumbed to profit taking and a firmer dollar on Friday after seesawing on news U.S. officials had warned of a possible terrorist threat to New York City.

"Outside of that, we were just going off the euro this morning," a floor broker said.

The ardor for gold was cooling slightly, less than a week before the holiday period starts.

Futures briefly recovered from a morning sell-off after an intelligence official said U.S. authorities were studying the threat, but the safe-haven rally reversed again once police said they knew of no credible threat to the city. An attack on the city on Sept. 11, 2001, destroyed the World Trade Center.

Benchmark December closed down $1.20 at $409.90 an ounce. It traded between $412.00 and $408.30, but looked comfortable above $410 an ounce, after reaching its highest since early 1996 on Thursday at $414.60.

Estimated volume was a dull 32,000 contracts, down from Thursday's official 39,570.

"The market is prone to trade on any little tidbit that comes through, but not lastingly, as the depth of participation is pretty shallow," said a dealer at a U.S. commercial bank.

"You could argue that an unsafe world is built into gold already, not withstanding some cataclysmic event," he said.

The next important target for gold is the 1996 high around $417.50, dealers said. They noted gold's rally has been orderly, with big up moves followed by healthy pullbacks.

But anything could happen in the super-thin trading conditions between Christmas and New Year's Day, especially if the euro makes a big move when many European traders are out.

The euro fell back after knee-jerk buying on fears of an attack and was at $1.2398/03, versus $1.2422/27 late Thursday.

The five-year-old currency hit a lifetime high against the dollar Thursday, its fifth in a row. The strong euro enhances the bullion buying power of European investors.

But gold has lagged the euro in recent days, catching up Thursday by topping its high from last week at $413.30 an ounce.

"The rally is still looking good to me because we have had no crazy moves," said a trader at a precious metals refining company.

Spot gold was last quoted at $409.10/60, off from Thursday's close at $409.90/410.40. London bullion dealers fixed the afternoon reference price at $409.75.

COMEX March silver stayed near Thursday's 4-1/4 year highs, settling 1.0 cent firmer at $5.738 an ounce. The range was $5.74-$5.69. Spot silver rose to $5.69/71 from $5.68/70. The fix was at $5.665.

NYMEX January platinum slipped $2.10 to $821.50 an ounce, extending Thursday's $16 skid from a contract and 23-year high. Spot platinum closed at $827.00/832.00.

March palladium was $1.35 easier at $199.75 an ounce. Spot closed at $191.50/197.50.