Daily Gold Update

Source: Reuters

New York— COMEX gold futures climbed on Monday, as a higher opening sparked speculative short-covering in the morning and the euro reversed early losses against the U.S. dollar, dealers said.

The market remained range-bound, however, despite the gains, as gold stuck within its recent $10 band and players mostly continued tracking moves in equities and currencies.

"The euro strengthened in late morning and that's why you've seen gold pick up," one New York gold trader said. "But what's really interesting is how August gold held the 200-day moving average at $342.60. I think that's why we saw this rally from last week."

August gold GCQ3 finished at $347.80 an ounce, up $2.70 from Friday, after trading between $344.10 and $348.20 — closing at its highest mark since last Monday.

Spot gold XAU= was last at $347.50/8.25, up from the prior New York close at $344.90/5.40. London bullion dealers fixed the afternoon spot reference price at $347.50.

Dealers said gold's rise also may have been fueled by Friday's CFTC trader commitments report showing room for speculative long accumulation after funds in the previous week decreased long positions.

CFTC data issued Friday showed the net speculative long position in COMEX gold fell 3,886 contracts to 41,328 lots as of July 8 from 45,214 a week earlier.

Many funds have been overbought since the euro's record-setting rally against the dollar lifted gold to $375.80 in late May.

The dollar lost its footing Monday on comments by International Monetary Fund chief economist Kenneth Rogoff that the dollar's fall was needed to correct the U.S. current account deficit.

The euro was at $1.1275/80 in midafternoon, stuck amid a $1.1244-$1.1308 range. A stronger euro can encourage European dealers to buy gold as a fall in the dollar makes gold cheaper for them.

The Dow Jones industrial average rose before a rush of earnings reports. Blue chips in midafternoon were up 137 points, or 1.50 percent, at 9,256.

Traders said they saw August gold futures encamped in a $346-$352 range for the near-term.

In other metals, platinum prices hit a four-month high on a spot-continuation basis, bolstered by fund and local buying, as gold's higher opening helped touch off buy orders in the market.

"What you saw was commission-house buying against some short stops being liquidated after short-covering in gold," said Ralph D'Esposito, broker at RJ Futures.

NYMEX October platinum 0#PL: rose $5.80 to $681 an ounce, the highest price on the weekly charts since March 19. Spot platinum XPT= was last at $682.00/687.00.

September palladium 0#PA: rose 75 cents to $176.50 an ounce. Spot XPD= traded at $172.00/177.00.

Silver futures backtracked on profit-taking after rallying the previous week with the industrial metals complex.

September silver 0#SI: shed 0.8 cent to $4.797 an ounce, trading from $4.825-$4.77. Spot XAG= was at $4.77/79, versus $4.78/80 at Friday's close. It fixed at $4.795.