Gold shrugged off a weaker
U.S. dollar to fall nearly 2 percent on Friday, on a sustained
sell-off from the metal's recent rises.Early physical buying helped gold touch an intraday high of
$630.80 an ounce, but profit-taking erased much of the gains
and dragged down the price to as low as $620.30.By 0524 GMT, spot gold was quoted at $624.50/625.25
an ounce, down sharply from $632.00/633.00 late in New York on
Thursday, but remained above a two-week low of $617.95 an ounce
hit on Wednesday."People think there will be a similar trading pattern,
that's why we saw some covering. I mean, the recent low was
about $620 and then we saw the market bouncing back," said a
dealer in Singapore.Some dealers expected gold to trade in a choppy
$615-to-$665-an-ounce range in the next few weeks, with heavy
technical selling expected to emerge if the metal breached the
key support level."It's definitely a continuation of what we saw yesterday.
The market is of the opinion that maybe the inflationary fears
are overcooked," said Darren Heathcote, head of trading at
Investec Australia in Sydney."The geopolitical tension will still be there... but at the
moment, some people have been happy to take profits. I think
we've seen a reasonable amount of profit-taking in the last
couple of days," he said.Worsening conflict between Israel and Hizbollah guerrillas
propelled gold to a two-month high of $676 on Monday. Gold
dropped sharply two days later before comments on inflation
from Federal Reserve Chairman Ben Bernanke helped it rebound.Expectations the Fed may be near the end of its two-year
tightening campaign started to grow after Bernanke said in two
days of testimony before Congress that inflation would likely
ease in coming quarters as the U.S. economy slows.Minutes from the Fed's last policy meeting showed that Fed
officials were undecided about another interest rate hike in
August and wanted to see more economic data before deciding
whether more credit tightening was needed.The euro was slightly higher at $1.2644. A weaker
dollar normally makes dollar-priced gold more attractive to buy
for holders of other currencies."I would say the immediate (trading) range will probably be
somewhere around $615 to $665... that I see a $50-range as a
possibility in the days, weeks ahead," said Heathcote.Tensions in the Middle East could prevent gold from
breaching $615, said Heathcote."I personally feel it probably won't at the moment. There's
too much risk on the upside ... not enough to really give me
comfort to think that it's going to fall back to those levels
in the present moment," he said.Gold, used in jewellery and investment, has lost around 15
percent in value since rallying to its highest in 26 years at
$730 an ounce in mid-May.Benchmark gold futures on the Tokyo Commodity
Exchange dropped by the daily 60-yen limit to 2,353 yen per
gram as weak technicals and falls in dollar-based prices
ignited active selling by Japanese investors."The market is trying to find a support level after a
volatile week," said Shuji Sugata, assistant manager at
Mitsubishi Corp Futures and Securities Ltd."The market sees 2,300 yen as the next key support level,
but falls below the level could be limited because of
geopolitical concerns," Sugata said.In other precious metals, platinum fell to
$1,210/1,205 an ounce from $1,222/1,228 late in New York.
Sister metal palladium also dropped to $306/311 an ounce
from $309/314.Silver inched down to $10.87/10.97 an ounce from
$10.98/11.08 late in New York.Precious Metals Prices by 0526 GMT*
Metal Last Net change Pct Move Gold
625.25 -3.95 -0.63
Platinum 1211.00 -11.00 -0.90
Palladium 306.00 -3.00 -0.97
Silver 10.87 -0.02 -0.18
Change so far in 2006
Metal Latest bid End prev year Pct Move
Gold 625.25 517.20 +20.89
Platinum 1211.00 968.00 +25.10
Palladium 306.00 254.00 +20.47
Silver 10.87 8.81 +23.38
Friday, July 21, 2006
