Daily Gold Update

Source: Reuters

New York— U.S. gold futures firmed from prior seven-week lows to end higher on Tuesday, hoisted by the euro's recovery from a two-month low against the dollar.

In other precious metals, silver regained the $7 an ounce mark, also moving in tandem with the euro, and platinum also rose, while palladium was the only loser.

Benchmark June delivery gold on the New York Mercantile Exchange's COMEX division gained 60 cents to $426.60 an ounce, after trading from $424.80 to $427.80.

"A light bounce by the euro during U.S. trade has given gold and silver a lift in today's COMEX session," said James Moore at TheBullionDesk.com.

Profit taking in the dollar before a speech on energy by Federal Reserve Chairman Alan Greenspan had given the euro and other major currencies a slight boost, Moore said.

Greenspan said in remarks to an oil refiners' conference that market forces could eventually lead to an increase in oil inventories and cool the current oil price "frenzy."

Energy market developments would "remain central" to the long-run health of the U.S. economy, the Fed chief added.

Gold has historically gotten a boost from high oil prices as some investors look to the metal as an inflation hedge.

COMEX June gold closed Monday at its lowest, at $424.70, since Feb. 11, with speculators selling as the dollar climbed on expectations of higher U.S. interest rates.

But the metal recovered after trading below the 200-day moving average with help from the euro's bounce.

"The euro has found strong support down at a trend-line near $1.28 against the dollar," said a trader at a precious metals refiner.

The euro by midafternoon was at $1.2843, after earlier sliding to $1.2799, when the dollar rose on ideas the Fed could hike rates more aggressively than it has so far.

Rising rates usually bolster the dollar while pressuring gold by making it costlier for non-U.S. buyers.

Gold prices are down about 5 percent since March 11 when April futures hit a 2005 high at $448 amid a stronger dollar.

Meanwhile, gold players are awaiting word on whether the International Monetary Fund will get enough support to prompt sales of some of its gold reserves to fund debt relief for the world's poorest countries.

The IMF is the world's third-largest official holder of gold, after the United States and Germany. It holds 103.4 million ounces of gold (3,217 tonnes) valued at a historical cost of around $9 billion.

But as of the end of 2004, the market value was $45 billion.

An IMF decision is expected by mid-month.

Chartists peg support in COMEX June gold at $419, and then at $414, $401.90, with resistance seen at $431 and $435.40.

Spot gold last priced at $424.30/5.00 an ounce, vs. New York's late Monday quote at $423.50/4.25. Tuesday's afternoon fix in London was at $424.60.

May silver gained 1.9 cents to $7.043 an ounce, after moving from $6.96 to $7.095. Spot silver reached $7.01/7.04, up from $6.98/01 on Monday. The fix was at $6.94.

NYMEX July platinum rose $1.60 to $857.30 an ounce. Spot platinum was at $855.50/860.50.