Daily Gold Update

Source: Reuters

New York— COMEX gold ended firmer as financial markets re-examined old worries about economic growth that had been in place before the start of the war in Iraq.

Dealers said gold moves seemed to be the mirror opposite of the S&P 500, reacting tick for tick to stock indices.

After languishing in the morning, June gold 0#GC: rose $1.10 to settle at $327.30 an ounce, holding between $327.90 and $324.90 and retracing part of Wednesday�s $3.30 gain.

Although the Dow Jones industrial average opened up slightly after a 100-point drop Wednesday, it had a hard time staying in the black, having already factored in the fall of Iraq�s Baathist government led by Saddam Hussein.

�I�m not sure how much of the war is in all of these things on an ongoing basis,� said metals broker John Tyree at Rosenthal Collins. �The war has served mostly to simply distract most people. Volumes are off�it�s the CNN, Fox effect.�

The shakiness of blue chips was driving investors back into gold despite Wednesday�s euphoric scenes of Iraqi crowds greeting U.S. troops as liberators and dancing on a fallen statue of Saddam Hussein in the middle of Baghdad.

A soft dollar was giving overseas investors more ammunition to buy bullion, which retained a safe-haven cachet as U.S. officials warned the fighting was not yet over.

Kurdish fighters took the northern city of Kirkuk in a bloodless rout of Iraqi forces on Thursday, raising the specter of a Turkish intervention that would vastly complicate the war.

At the same time die-hard Saddam loyalists and a suicide bomber attacked U.S. troops in Baghdad and looters rampaged in several cities.

The whereabouts of the Saddam is not known. The United States tried to kill him in the opening bombing raid of the war on March 19, and again on Monday night.

Spot gold XAU= was quoted at $326.50/7.00, up from the close at $325.40/6.15 Wednesday. London gold dealers fixed the afternoon spot reference price at $324.60 an ounce.

Gold hit a 6-1/2 year high two months ago at $388.50 on prewar safe-haven buying. But most of the longs were washed out in gold�s fall to an 18-week low this week at $318.75.

�Gold surrendered about two months before the war even started,� a trader said.

Dealers predicted gold would stay in a range, with demand for gold bars from physical players in the Middle East and Asia putting in a floor between $310 and $320 and the upside probably limited to the $350/$360 area.

�Gold should hold above $320 for the forseeable future with the unstable geo-economic situation giving the opportunity for further gains,� wrote James Moore of TheBullionDesk.com

Research firm Gold Fields Mineral Services said in its Gold Survey 2003, released Thursday, that gold prices may go back above $350 an ounce in the second half of 2003 based on a weak outlook for stock markets and the dollar.

�The war premium may have imploded as some uncertainty lifted and on euphoria over what looks like a relatively easy victory for the U.S.-led forces in Iraq. But that�s not done too much to change the economic outlook which remains pro-gold,� said GFMS managing director Philip Klapwijk.

May silver 0#SI: rose 0.7 cent to $4.49 an ounce, trading $4.495-$4.455. Spot silver XAG= was close unchanged at $4.48/50. The fix was at $4.47.

NYMEX July platinum 0#PL: slipped $1.60 to $614.10. Spot platinum XPT= fetched $622.50/627.50.

June palladium 0#PA: rose $1.35 to $175.50. Spot palladium XPD= closed at $172.00/177.00.