Daily Gold Update

Source: Reuters

New York— U.S. gold futures rose on Wednesday, reaching a one-month peak as a sharply higher euro made bullion more attractive and sparked heavy institutional buying, traders said.

Other precious metals gained ground, including platinum which soared more than 1 percent to its highest price in New York in six months.

At the New York Mercantile Exchange's COMEX division, benchmark December gold closed $5.00 higher at $442.70 an ounce — its highest for futures since July 1 — trading within a range of $436.40 to $443.00.

The euro climbed to a two-month high against the dollar and was at $1.2342 from $1.2195 late on Tuesday. A weaker dollar tends to boost gold prices as dollar-denominated bullion gets cheaper for investors overseas.

Summer vacations have kept gold trading a bit thinner recently, but Wednesday's COMEX estimated volume was around 72,000 contracts, compared with just 46,000 on Tuesday.

"With the technical breakout above the 200-day moving average, there was significant funds buying," said one trader. "But it all started with the euro. Right now there is momentum to test the upper limits."

Scott Meyers, an analyst with Pioneer Futures, said the euro's breaking through the $1.2285 barrier could mark the beginning of further advances in gold and the European currency. He saw $450 gold within the month.

"The break higher by the euro today is likely to generate further momentum for gold in the coming sessions with gains in oil and copper helping to fuel the bullish tone in commodities," said James Moore of TheBullionDesk.com.

Resistance above is now pegged at $438/440/442, he said, but the thin trading conditions still leave the metal at risk of a correction lower.

October delivery platinum soared $11.10 to $918.10 an ounce, while spot traded at $912/918 from $900/905 on Tuesday. It was the highest the metal has traded in New York since January when it was at $950.

Concerns about a possible South African mining strike as early as Sunday have also contributed to driving the market during a seasonally slow period.

Gold and platinum companies in South Africa, the biggest bullion producer in the world, face the first country-wide strike in 18 years after wage talks broke down with miners' unions.

Spot gold changed hands at $436.35/$437.05, sharply up from $431.90/432.70 in New York on Tuesday.

COMEX September silver closed at $7.307 an ounce, up from $7.262 on Tuesday, while spot silver hit $7.27/$7.30, compared with $7.22/$7.25 on Tuesday.

"At the moment the metal (silver) is struggling to clear $7.30 which could prompt consolidation back towards $7.15," said Moore. "However with gold and the base metals remaining strong, a break higher seems more likely."

September palladium rose $1.00 to $196.50 an ounce, with spot last at $193/$197 from $192/194.