Daily Gold Update

Source: Reuters

New York— COMEX gold rose to its highest in almost six weeks Tuesday after Iraq's parliament rejected the U.N. disarmament plan, raising prospects that Baghdad would balk at inspections and invite a U.S.-led war.

After a unanimous "no" vote, members of Iraq's parliament said President Saddam Hussein, who holds the power in Iraq, will have the final word with three days left on a U.N. Security Council deadline to accept the toughly worded resolution or face "serious consequences."

Gold was still seen as a safe-haven asset, though its allure was dimmed a bit as the Dow Jones industrial average shook off several days of losses.

Helped by short-covering at the open, COMEX December gold settled $3 higher at $324.70 an ounce, trading from a low of $321.00 to $325.00, its highest since Oct 3. Estimated volume was 36,000 contracts.

Stop-loss buying accelerated the move late in the session when the contract broke above Friday's high at $323.50, dealers said.

"Iraq has a little bit to do with it, but it's probably more technical," said James Pogoda, vice president of precious metals at Mitsubishi International Corp, noting that oil prices moved up only slightly.

Spot gold was quoted late at $324.00/4.50, up from $321.00/1.50 Monday afternoon. London dealers fixed Tuesday's afternoon spot reference price at $321.75 an ounce.

Although the dollar steadied from recent selling, it stayed weak, meaning gold still looks attractive to overseas investors in local currency terms.

Gold had to compete for interest with the stock market, where the Dow was up 105 points in afternoon trade, snapping a three-day losing streak.

"There has been decent, big volume buying in here, so I think you have some funds accumulating positions," said one COMEX gold broker. "On the other hand, the dollar has not gone negative all day, which is not bullish for us and the Dow is widening its rally."

December silver <0#SI:> rose 2.8 cents to $4.60, and traded a range of $4.55-$4.62. About 13,000 contracts changed hands, according to the COMEX.

Spot silver was quoted at $4.59/61, up from Monday's close at $4.56/4.58. Silver was fixed at $4.565 an ounce in London.

NYMEX December palladium <0#PA:> fell $3.55 to $286 an ounce, after carving out another contract low at $284.00 on Tuesday. Spot palladium set another 3-1/2 year low and was last quoted at $282.00/294.00.

Earlier, Johnson Matthey said in its Platinum 2002 Interim Review that it sees world palladium demand falling 28 percent this year to 4.88 million ounces, an 8-year low. A sharp drop in its use in autocatalysts is blamed for the gloomy outlook.

Lower demand will keep the palladium price in a $250-$330 range over the next six months, the metal refiner said.

NYMEX January platinum <0#PL:> rose $6 to $578.70 an ounce. Spot platinum closed at $580.70/585.70.