Gold News & Info

Source: Marketwatch

San Francisco— Gold futures headed lower Monday morning on the heels of a six-session win that's lifted their value by more than 7%.

Prices touched a 25-year peak in electronic trading, but eased back as concerns about Iran's nuclear standoff with the West were eased by what seems like an attempt at compromise by President Mahmoud Ahmadinejad.

Gold for June delivery was last trading down $8.10, or 1.2%, at $676.20 an ounce on the New York Mercantile Exchange, after earlier rising to as high as $688.20 in the overnight session as the dollar fell sharply against the yen and other major currencies. The contract gained $48 between April 27 and May 5.

"Nothing goes straight up and … it's absolutely necessary for markets in major uptrends to experience periods of retracement and consolidation," said Dale Doelling, chief market technician at Trends In Commodities.

Gold fell along with crude prices, after an Iranian government spokesman told reporters that Ahmadinejad has written a letter to U.S. President Bush proposing "new solutions" for "getting out of international problems."

That would mark the first letter from an Iranian leader to a U.S. president in 27 years.

The spokesman didn't specifically refer to the key issue in their dispute, Iran's nuclear- research program, which the U.S. and other Western countries are seeking to stop, fearing Tehran is attempting to create nuclear weapons, newswires reported.

"Gold seems to be taking a breather from its rapid ascent to $700 based on the news of a letter being sent to President Bush from Iran," said trader Kevin Kerr.

However, "the bottom line is nothing has changed, and as the situation escalates we are likely to see a new flurry of buying and a breach of $700 gold in short order.

"We may run into key resistance ahead of that number as we typically do since $700 is a key stop level for some investors and it will take a significant push to get through the $690- $692 level. [But] it seems destined to happen unless we get a sudden capitulation from Iran, which seems highly unlikely."

Silver also pulled back, with the July contract last trading down 37 cents at $13.51 an ounce. July platinum was the lone gainer up $4.90 at $1,194 an ounce while June palladium fell $5.25 to $373.50 an ounce.

July copper fell 4.35 cents to $3.45 a pound.

Investec Securities said the copper market now believes that China has closed out the 130,000-ton short position allegedly run up by trader Liu Qibing late last year. Qibing, who worked for China's State Reserve Bureau, disappeared after building the position and was later arrested in Beijing.

"Most of the bureau's short positions were closed in March and recent weeks. There are few positions left and they are not sufficient to have a big impact on the market," Investec quoted Yang Yinghui, head of metals trading at Cofco Futures, as saying.

On the supply side, copper inventories were down 520 short tons at 15,202 short tons as of late Friday, according to data from the New York Mercantile Exchange.

Gold stocks were up 314,289 troy ounces at 7.65 million, while silver supplies were unchanged at 123.6 million troy ounces.

Tracking the metals equities Monday, the Amex Gold Bugs Index fell 2.5% to 370.61, the Philadelphia Gold and Silver Index lost 2.4% to stand at 157.96, and the CBOE Gold Index reached 161.52, down 1.8%.