Daily Gold Update

Source: Reuters

New York— The currency markets continued to whipsaw gold, which fell back on the COMEX Friday after a rally in the euro fizzled without logging a new high.

August gold 0#GC: , which became the benchmark on Friday as June delivery period got under way, fell $5.10 to $365.60, erasing Thursday�s $4.40 gain to end a very volatile week.

The day�s range was $370.80 to $361.50, almost as wide as Thursday�s $10 rally from low to high. Futures seemed to be establishing a floor above $360 after Tuesday�s run to a 15-week high at $374.90 on the back of the surging euro.

�There was a moment we thought it was going to pull a Thursday and go right back up to its highs. But no such luck,� said the head of a bullion trading firm.

�The dollar is a little bit better today and equity markets are doing better,� he continued. �So it�s just a question of �is gold going to sustain its momentum or not?� It looks like it is just taking a little profit right now.�

Estimated volume was a moderate 50,000 contracts, including 1,784 late switches out of speculative long positions in June. A switch comprises two contracts.

Spot gold XAU= closed at $364.60/5.35, down from the last quote Thursday at $368.70/9.45, but well up from London�s afternoon fix at $361.40.

The euro reached $1.1915 Friday, a few ticks below Tuesday�s $1.1925 record, before skidding to $1.1774/78 by afternoon, raising the price of gold for European investors.

�Traders seem keen to remain bullish for the moment, but in the same breath are quick to book a profit, wrote precious metals analyst James Moore at TheBullionDesk.com. �The dollar continues to determine gold�s intra-day moves and the next round of interest rate decisions by the Fed and ECB are likely to be pivotal for gold.

�I think we see gold continuing in the wide $360-70 range for the moment,� he wrote.

Open interest in gold futures jumped 3,885 contracts to 207,920 on Thursday, implying the addition of new long positions when gold bounced so sharply. Traders worry about an overextended market when open interest exceeds 200,000 lots.

Investors were rotating back into stocks. The Dow Jones industrial stock average was last up 132 points.

A surprisingly strong reading on U.S. Midwest business conditions from Chicago Purchasing Management Index, which rose to 52.2 in May from 47.6 in April, also kept gold on the ropes.

Even a smaller than hoped for jump in the University of Michigan consumer sentiment index to 92.1 in May from 86.0 in April did not detract from the mood on Wall Street.

July silver 0#SI: went down 4.2 cents to $4.533 an ounce, trading $4.59-$4.51, a 39-day low. Spot silver XAG= closed at $4.52/54, down from $4.56/58 late Thursday. The fix was at $4.56.

NYMEX July platinum 0#PL: rose $2.90 to $636.80 an ounce, steadying from Thursday�s $28.80 plunge. Spot XPT= was last indicated at $641.00/646.00.

September palladium 0#PA: displaced June as the active contract and was up $2.85 at $184.50 an ounce. Spot XPD= fetched $182.00/188.00.