Daily Gold Update

Source: Reuters

New York— COMEX gold settled little changed on Wednesday, capped after hitting a six-month high overnight by a firmer dollar and by profit-taking after a one-month gain of better than 6 percent.

Traders said the overbought market was reluctant to keep buying before Friday's important September U.S. employment report.

"People are exceedingly aware that it's coming out and that it is four weeks before the election and are concerned that perhaps there will be a very good figure," said Graham Leighton, a precious metals vice president at Societe Generale.

December gold hit $422.20 an ounce in ACCESS electronic trade overnight, besting Friday's $421.90 peak. It was the highest price for the contract since April 13, when it was retreating from 15-year highs on the first of that month.

The contract closed up 20 cents at $420.00, after bottoming at $417.50 in open-outcry trade.

Investment funds and traders have April's $436.50 peak for the December contract in the cross hairs. Bulls are counting on continued weakness in the dollar, record high oil prices and geopolitical tensions before the November U.S. presidential elections to keep gold in favor as a safe haven.

"There is not that much selling over the market," a COMEX broker said. "Everybody is looking at the crude. People are getting convinced here that you can't sell it, so you're getting some added buying inside here. We're just asking ourselves: 'Where is this thing going to go?'"

The net speculative long position in futures is getting huge again. But traders said this week that funds have room to keep buying before they reach the extremely overextended situation seen during the run to the 2004 highs.

"Open interest is exceedingly large and the number of spec longs is more than it's been for six months," Leighton said. "They are nervous that we're close to the highs for the year coming into these (jobs) numbers."

Spot closed at $417.75/8.50, just off Tuesday's $418.00/8.75. London's afternoon fix was $418.45.

December silver went up 14.3 cents to $7.245 an ounce, reaching its highest price since April 19 at $7.28, up from a low of $7.08. It extended Tuesday's 5-percent breakout rally. Dealers said speculators saw silver as a technical buy, being far less overbought than gold.

Spot silver rose to $7.20/23 from $7.05/08 at the previous close. The fix was at $7.15.

NYMEX January platinum went up $6.60 to $845.80 an ounce. Spot was last quoted at $841.50/846.50.

December palladium was $2.55 firmer at $227.50 an ounce. Spot palladium last traded at $221.00/227.00.