Daily Gold Update

Source: Reuters

New York— U.S. gold futures posted a three-week high on a closing basis on Wednesday as speculative players who bailed out of base metals and crude oil looked for alternatives within the precious metals.

Dealers said a lamer dollar late in the day also supported gold, though the metal stuck to its recent range ahead of U.S. data later this week and a clearer picture this weekend about possible IMF gold sales.

Silver finished firmer as well, while platinum and palladium were mixed.

June delivery gold on the New York Mercantile Exchange's COMEX division finished at $431.00 an ounce, up $1.70 on the day, after moving between $428.80 and $431.50.

The close was June gold's strongest since March 22 when the market was stepping off from 2005 highs near $450.

Frank Aburto at FC Stone said gold appeared to get a lift, despite the weaker euro and oil earlier, as metals such as aluminum, copper and zinc got slammed by fund profit-taking.

"It's a bit puzzling because gold is not following the traditional factors" of tracking the euro and oil, he said. "However, it hasn't really moved with great force today."

Brokers are pegging COMEX June gold as in a band between $426 and $432, with prices closely tracking dollar moves.

More data, especially U.S. net capital flows figures on Friday, will be scrutinized for clearer direction on currencies.

The market also is awaiting word from this weekend's G7/IMF/World Bank meetings on a proposal to use some International Monetary Fund gold reserves to pay off poorer nations' debts.

The IMF is the world's third-biggest holder of gold with 103.4 million ounces, but market players are largely expecting there will be no sales due to influential U.S. opposition.

Spot gold last priced at $429.00/9.80 an ounce, above Tuesday's New York close at $426.90/7.70. Wednesday's afternoon fix in London was $427.50.

"Range play remains the theme ahead of Friday's (capital inflows) and consumer sentiment data, with (bullion) set to hold the $420-430 area," said James Moore at TheBullionDesk.com in a report.

Gold in the morning was firmer after a government report showed retail sales rose 0.3 percent in March, less than half of the 0.7 percent predicted by Wall Street.

The figures dimmed confidence in the strength of the economy, prompting some people to bet the Federal Reserve may not have to raise interest rates as sharply as some feared.

Traders felt that was supportive to gold because increasing rates would tend to support the dollar.

The euro was back up against the dollar in the afternoon, fetching $1.2908 after a choppy day of trading.

A lower U.S. currency usually boosts gold by making the dollar-denominated metal more affordable for non-U.S. buyers.

COMEX May silver advanced 7.0 cents to $7.225 an ounce, after moving from $7.07 to $7.27. Spot silver was quoted at $7.19/22. It fixed at $7.16.

July platinum rose $3.80 to end at $867.60 an ounce. Spot platinum inched up to $862/867.

June palladium lost 30 cents to $197 an ounce. Spot palladium traded to $195/198.