Daily Gold Update

Source: Reuters

New York— COMEX gold recovered from morning losses to end higher Thursday, buoyed by worries about dollar investments and a rise in the euro after the European Central Bank chose not to lower interest rates.

The bounce in gold came as silver pulled back from an eight-week high on profit-taking after speculators had bet big on a narrowing price ratio between the two.

August gold GCQ3 closed up 70 cents at $344.60 an ounce, in a $342.10-$346.00 range. It hit a two-month low and bottomed at the 200-day moving average, considered an important long-term trend indicator by chartists.

"It bounced off that 200-day moving average once again, $342.30 on August. That's going to be a good support number for now," said a gold trader. "In gold and silver there was this very big ratio play that everybody was talking about, selling gold and buying silver."

Faltering at first, the euro got a lift after the European Central Bank left its minimum bid rate at 2.00 percent, opting for now not to repeat last month's easing, which stopped a rally in the currency. But the door remains open for more economic stimulus in the autumn.

Gold has been tightly correlated with the euro since the currency rose to a lifetime high at $1.1932 on May 27. The precious metal rose to a 15-month peak on its coattails; and a massive, though contracting, speculative long position has been hanging over the gold market ever since.

The euro was last trading at $1.1386/89, up from $1.1352/58.

Also helping gold rise with the euro from overnight lows was a 5,000 increase in U.S. jobless claims last week.

A large trend-following fund was a huge seller overnight, exchanging futures for physical gold.

"Over 6,000 have been posted on EFPs (exchange for physicals), showing closing out or liquidation of long positions. A lot of these funds are reversal systems," said the broker.

Spot gold XAU= last fetched $344.50/5.00, up from $343.90/4.40 late Wednesday. London bullion dealers fixed the afternoon spot reference price at $343.40.

Silver, considered both an industrial and precious metal, came alive this week with base metals like copper.

"The general thought is that better economic conditions should bolster physical demand for some of these commodities, silver included," said James Pogoda, a vice president of precious metals at Mitsubishi International Corp. "Then you get the trend followers piling on."

But a 125-point fall in the Dow Jones industrial average helped let some steam out of the silver market, even as it fostered rotation into gold as an alternative asset.

September silver 0#SI: ended down 1.0 cent at $4.815 an ounce, touching $4.795 and $4.895, its highest since May 15.

Spot silver XAG= closed at $4.81/83, still up from $4.80/82 late Wednesday. It fixed at $4.825.

NYMEX October platinum 0#PL: went up $7.80 to $670.60 an ounce. Spot XPT= fetched $674.00/679.00.

September palladium 0#PA: rose $2.85 to $176.00. Spot palladium XPD= was at $172.00/178.00.