Daily Gold Update

Source: Reuters

New York— U.S. gold futures erased steep morning losses to end higher Tuesday, as investors snapped up the yellow metal after a burst of fund selling and profit taking overnight briefly sent it to cheaper levels.

In other precious metals, platinum stayed under pressure, however, after backpedaling from the pivotal $900 per ounce mark, dealers said.

August delivery gold rose 50 cents to end at $440.50 an ounce on the New York Mercantile Exchange's COMEX division. It bounced back after hitting its lowest mark since Thursday in the morning, within a $440.40-$435.90 session range.

"You saw some fund buying and speculative call (options-based) buying, and after the market held and rallied a bit, some shorts were covering," said a New York desk trader.

Gold prices had moved up too quickly in previous days, sparking long liquidation after futures on Monday reached a three-month high above $443, trading sources said.

But it uncovered strong technical support near the $434 area today, with short-term specs helping push prices back up.

"Technically, gold looks great. People are still pretty bullish," said the desk trader.

Traders and analysts saw gold likely to patrol a range of $430 to $445 over the medium-term.

Interestingly, two big investment banks had opposing views on gold's price outlook in new research reports on Tuesday.

UBS Investment Bank revised downward its average forecast for 2005 to $430 per ounce from $440 previously, "largely due to a reassessment of the prospects of the euro," it said.

Usually, a stronger dollar makes gold and other metals denominated in the currency more expensive for non-U.S. investors but recently gold prices have rallied sharply despite a tumbling euro.

Meanwhile, Goldman Sachs JBWere said diversification away from the euro could drive world gold prices as high as $520 an ounce over the coming year.

The euro last was 0.1 percent softer at $1.2134, hovering just above a nine-month low against the dollar.

Final estimated COMEX gold volume was 60,000 lots, against Monday's tally of 49,247 lots.

Open interest in COMEX gold futures continues to increase. Interest climbed 4,300 lots to 282,808 lots ahead of Tuesday's session, after it rose 7,004 lots on the prior day.

Spot gold was quoted at $438.50/439.25, above New York's late quote on Monday at $437.80/438.50. Tuesday's afternoon fix in London was at $435.20.

In euros, gold fetched 360.31/0.96 per ounce late Tuesday, after reaching a record 362.20 on Monday.

July silver fell 1.0 cent to close at $7.292 an ounce, after trading $7.31-7.17. Spot silver hit $7.25/28 an ounce, vs. $7.26/29 on Monday. It fixed at $7.215.

At NYMEX, July platinum dropped $16 to $884.30 an ounce, at the low-end of a $898-879 session range. Spot platinum traded to $878/882.

Thinly traded September palladium slid back $3.40 to $189.05 an ounce. Spot reached $186/189.