Gold News & Info

Source: Reuters

New York— U.S. gold futures closed at two-week highs and silver reached its highest since early December on Monday, cheered by an improved technical picture and the dollar�s recent leg lower, traders said.

April delivery gold rose $5.30 to finish at $427.30 an ounce on the New York Mercantile Exchange�s COMEX division, after trading from $421.90 to $427.70 — its highest close since Jan. 28.

Precious metals have rallied since last week, when the recent dollar�s rally seriously sputtered out amid calculations that the U.S. trade deficit would weigh on the currency.

Leading the pack higher in the last three days, silver has had a stunning reversal from support near $6.50 an ounce, gaining 60 cents, or almost 10 percent in value, while gold has rebounded from support near the $410 level.

�It seemed like the markets were oversold,� said a precious metals desk trader. �Some support came into the market and everyone scrambled to cover shorts, and that has just sent everything skyrocketing.

�It�s all dollar and technical,� he said.

Fund and CTA (Commodity Trading Advisor) selling pressured the dollar again Monday after a jump in Japan�s current account surplus highlighted worries over the imbalance between Asian trade surpluses and massive U.S. deficits. The euro was at $1.2969 by midafternoon, against $1.2871 late on Friday.

A lower dollar makes dollar-priced precious metals more affordable for non-U.S. buyers.

Dealers said geopolitical issues also played a role in attracting investors to gold as a safe haven, with increasing concerns over the Korean peninsula and tensions between the United States and Iran over Tehran�s nuclear ambitions.

An apparent lack of broad support for proposed sales of gold held by the International Monetary Fund to finance Third World debt relief was supportive as well.

In gold, �you�d have to get above $430 or this would be just a short-term rally,� cautioned the desk trader.

Markets seemed to be bracing for Federal Reserve Chairman Alan Greenspan�s semiannual testimony to Congress Wednesday and Thursday, after his recent optimistic comments about the U.S. current account deficit.

The latest weekly Commitments of Traders data from the Commodity Futures Trading Commission showed the net fund long position in COMEX gold futures fell to 11,175 contracts as of Feb. 8 from 28,118 lots a week earlier.

�That�s the smallest fund long position since Oct. 22, 2002,� Tim Evans, senior commodity analyst at IFR Markets, said in a report on the data.

�While in theory the funds could just keep on selling to accumulate some short positions for a change, we think this more likely exhausts the long vulnerability, setting the stage for an eventual fresh cycle of long accumulation,� he said.

Evans put technical resistance in April gold at the Jan. 30 high of $430.60, and then at $449, followed by the 16-1/2-year peak from Dec. 2 at $460.50, with support seen at $411.50.

Spot gold priced at $425.25/6.00, versus $420.50/1.25 at New York close on Friday. Monday�s afternoon fix in London was $424.20.

March silver strode up 13.0 cents to $7.34 an ounce, after trading from $7.185 to $7.35 — its loftiest close since Dec. 7. Spot silver hit $7.31/34, well above Friday�s late quote at $7.16/19. Monday�s London fix was at $7.245.

CFTC data showed the net fund exposure in COMEX silver futures fell 2,469 to 27,763 contracts in the latest week.

Brokers peg resistance in silver futures at $7.35/40 and $7.50/60 and then $8.235, with support at $7.09, $6.89 and $6.75/80.

April platinum rose $3.90 to a two-week closing high at $875.10 an ounce. Spot touched $874.50/879.50.

March palladium was up $3.20 at a 12-day closing peak at $188.15 an ounce. Spot was worth $183/188.