Source: CBS.Marketwatch
San Francisco— Gold futures closed at their lowest level in three sessions Tuesday as a rebound in the broader stock market and strength in the U.S. dollar reduced demand for the precious metal.
The dollar found strength, striking a 14-month high against the yen, as comments by Federal Reserve officials fueled expectations that Fed Chairman Alan Greenspan will reiterate the central bank's measured interest-rate increase policy in congressional testimony starting Wednesday.
At the same time, a slew of stronger-than-expected quarterly earnings reports provided support for the broader market.
"Greenspan's cheerleading has lifted the U.S. dollar again today, giving the [gold] bears plenty of ammo near-term," said Peter Grandich, editor of the Grandich Letter.
"The shorts have been gunning to break major support around $416 ever since their highly successful bear raid that began on July 1st," he said.
Against this backdrop, gold for August delivery fell 80 cents to close at $420.20 an ounce on the New York Mercantile Exchange, its lowest since Thursday. The market considers $420 a key level since prices haven't closed under that mark in six weeks.
Gold "looks in real danger of a break lower, potentially targeting support at $415 and $410," according to James Moore, analyst at TheBullionDesk.com in London.
'Summer doldrums'
"Recent signs of U.S. economic growth are breeding dollar bulls across the globe, and this has weighed somewhat on the gold price," said Brien Lundin, editor of Gold Newsletter.
All in all, however, "gold has actually weathered this dollar rally quite well, managing to hold close to the psychologically important $420 level."
"All this is to be expected, as we're in the midst of the summer doldrums for gold," he said.
Looking ahead, by early- to mid-August, the gold market will likely "have seen the bottom, and the price will have begun strengthening for the typical fall rally," he said.
September silver also declined Tuesday by 2 cents to end at $6.985 an ounce.
But September palladium tacked on $2 to close at $188.85 an ounce, October platinum ended at $870.20 an ounce, up $2.30 and September copper climbed to $1.5865 a pound, up 2 cents.
Tracking inventories, copper supplies were down 316 short tons at 13,595 short tons as of late Monday, according to Nymex. Silver stocks were up 600,400 troy ounces at 106.1 million, while gold inventories stood at 5.74 million troy ounces, unchanged from the previous session.
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