Daily Gold Update

Source: Reuters

Washington— Gold futures in New York closed down and off from one-week highs on Thursday, as a higher dollar and a lack of momentum kept the metal within its recent narrow trading range, dealers said.

Silver slid back on speculative profit-taking after prices earlier reached a three-week high.

June delivery gold on the New York Mercantile Exchange�s COMEX division fell $1.10 to settle at $420.80 an ounce, after trading from $423.30 to $420.60.

Market sources said gold was consolidating after a bout of fund liquidation in metals early this week, while commercial activity in futures appeared to be minimal.

�Gold has set a base around the $420 level. It has been trading in a $3 range, very closely watching the dollar and euro,� said Frank Aburto at FC Stone in New York. �It�s bound to remain steady and quiet over the next few days. I think $415 to $420 is a good buying area.�

�We are currently predicting a gradually depreciating dollar and given the relative inelasticity of global gold supplies, it is likely that gold will move sideways or increase slightly over the next year,� Wachovia Corp. said in its Metals Report 2005.

Wachovia forecast an average gold price of $430 for this year, with the metal rising to $434 by the fourth quarter.

The dollar held higher in the afternoon, despite a surprisingly weak report on regional U.S. business, as the currency looked technically firm.

A stronger U.S. currency tends to make dollar-priced commodities such as gold less attractive to investors.

The euro last was off slightly at $1.2634.

The Philadelphia Federal Reserve�s business conditions index for May slumped to 7.3, almost a two-year low, from 25.3 in April. Economists had expected the headline index to fall to 19.0.

Soft employment, prices paid and new orders components were also dollar-negative, since they suggest the pace of U.S. interest rate hikes will not be quickened.

Spot gold last touched $420.30/421.00 an ounce, below Wednesday�s New York close at $421.30/2.00. London�s afternoon fix on Thursday was $420.80.

July silver fell 6.5 cents to $7.14 an ounce, after trading $7.245 to $7.11. Spot fetched $7.09/12 versus $7.18/21 previously. The fix was $7.18.

Funds recently have been featured buyers in silver and sellers of gold, Standard Bank said, owing to fluctuations in the spread between their respective prices.

With the ratio of gold to silver just below 59:1, Standard pegged key support at 57:1, with a break targeting 51:1 on the charts, a mark last seen in April 2004 when silver hit $8.30.

On the board at NYMEX, July platinum rose $4.50 to end at $867.40 an ounce. Spot platinum hit $864/867.

June palladium eased $3.10 to $188.90 an ounce. Spot edged down to $187/190.