Daily Gold Update

Source: Reuters

New York— COMEX gold soared to a two-month high Thursday, as the dollar�s fall against the euro accelerated after the European Central Bank held interest rates steady, despite worries about the euro-zone economy.

Traders are again bullish on gold. Gold is up about $30, or 9 percent, from the 2003 lows hit a month ago, as it recoiled from six-year highs around $390 an ounce in February, when markets were rattled by the build up to the war in Iraq.

June gold 0#GC: ended up $6.50, 1.9 percent, at $348.70 an ounce. Rising from a low of $341.20, the contract gathered momentum on the break above chart resistance around $345, but topped at the psychological $350, its priciest since March 12.

Estimated volume was a brisk 62,000 contracts, up from Wednesday�s official turnover of 42,956 lots.

Spot gold XAU= closed at $348.35/85, up from Wednesday�s $341.60/2.35. London bullion dealers fixed the afternoon spot reference price at $346.45 an ounce.

�With a clear trend in the euro and clear economic weakness you have to be friendly to gold,� said Robert Gottlieb, head of bullion trading at HSBC. �Gold wasn�t really performing as well as the euro was and now it�s just catching up.�

The euro hit a new four-year high against the tumbling greenback at $1.1506 after the ECB stood pat, preserving the U.S.-Europe interest rate spread that is working in the euro�s favor. The ECB�s benchmark rate is 2.5 percent, twice the 1.25 percent U.S. fed funds target rate.

Low U.S. interest rates benefit gold, which carries almost no yield. At the same time, because gold is priced in dollars, the weak U.S. currency makes bullion look cheaper to overseas investors in local currencies.

Money rotated into gold from the stock market, where the Dow Jones industrials were down 66 points Thursday afternoon.

Commodity Trading Accounts were good buyers of gold on the floor, with some hedge funds also jumping in to go long.

�Yesterday�s sellers here in the gold turned out to be today�s buyers. A lot of people who had gotten short on reversals yesterday, had to reverse again today to get long,� said one COMEX broker.

Silver lagged gold but made a new three-month high. The July contract 0#SI: rose 6.0 cents to $4.802 an ounce, trading from $4.73 to $4.815. Volume was around 10,000 lots.

Spot silver XAG= fetched $4.78/80, up from $4.72/74 late Wednesday. The fix was $4.725 an ounce.

Gold Fields Mineral Services Managing Director Philip Klapwijk said Thursday that the average silver price in 2003 will rise to $4.78 an ounce from $4.60 in 2002.

Presenting the World Silver Survey 2003, prepared by GFMS for the Washington D.C.-based Silver Institute, Klapwijk said Chinese government selling should cap silver as prices rise.

�If you take the $4.30-$5.00 range, which is really where silver has been since about May 2000, I don�t really see prices escaping that range,� he told Reuters. �I don�t think it�s sustainable at much higher prices because I don�t think the fabrication demand is going to come back strongly enough.�

NYMEX July platinum 0#PL: rose $3.60 to $630.40 an ounce. Spot platinum XPT= closed at $640.00/645.00.

June palladium 0#PA: fell 55 cents to $162.20 an ounce. Spot palladium XPD= fetched $157.00/162.00.