Daily Gold Update

Source: Reuters

New York— Gold futures in New York tumbled on Wednesday, hitting a one-week low on a closing basis on speculative liquidation sparked by a strong dollar and a sharp drop in the crude oil price, dealers said.

Profit-taking also continued in gold after it last week hit eight-month highs, but prices held above support at $445 an ounce, basis New York futures, and at $440 in spot, for now.

"There was some panicked liquidation, and also profit-taking, and the market hit a bunch of sell-stops," said a broker at a futures commission merchant in New York. "I think keeping an eye on the energies and currencies is probably what a lot of people were doing."

December delivery gold on the New York Mercantile Exchange ended down $6.30 at $445.20 an ounce, after dealing from $452.10 and $443.40.

Traders said concerted selling shoved the gold market lower as the dollar climbed after U.S. data released in the morning failed to shake investors' faith that the Federal Reserve could keep steadily raising interest rates.

Aside from gold keeping its tight inverse link to the dollar, it also stayed sensitive to crude oil, which dropped more than 4 percent to $63.30 a barrel in late trading.

Gold can come under pressure when oil prices fall because investors have less interest in using the yellow metal as a hedge against inflation.

Buying out of the Middle East has helped to prop up gold prices, however, during an otherwise slow period in the market typical of the late summer, traders said.

In the spot market, gold bullion last was at $439.90/440.70 an ounce, below Tuesday's late New York quote at $446.10/6.90. Wednesday's afternoon fix in London was at $442.

The euro extended losses into the afternoon and last traded at $1.2262, vs. $1.2357 late Tuesday.

U.S. data released earlier showed producer prices rose faster than expected last month in a sign of building inflation pressures.

The July producer price index rose 1.0 percent and, excluding the volatile areas of energy and food, so-called core producer prices climbed 0.4 percent. Economists had forecast overall producer prices to rise 0.5 percent, with core prices up 0.1 percent.

Analysts pegged chart support in COMEX December gold futures at $445 an ounce and then at $442.90, with resistance seen at $452, followed by last Friday's eight-month high of $455.30, and then at around $460.

Final estimated COMEX gold volume was 70,000 contracts, above Tuesday's official 56,264-lot count.

Open interest as of Tuesday shot up 10,171 lots to 331,633 contracts.

COMEX September silver fell 5.0 cents to $6.993 an ounce, in a session range of $7.055 to $6.95. Spot slid to $6.97/7.00, from $7.03/06 on Tuesday. It fixed at $7.00.

In the NYMEX metals, October platinum went down $3.20 to $889.50 an ounce. Spot platinum reached $891/894.

September palladium rose 10 cents to $185.15 an ounce. Spot was quoted at $183/187.