Gold News & Info

Source: Alden Bentley, Reuters

New York— Gold weakened Wednesday, marginalized in the hours before a U.S. deadline for Iraqi President Saddam Hussein to flee or face attack, as stocks and currency markets bet on a short war to topple his regime and find illegal weapons.

Financial markets were buffeted by rumors, with U.S. and British troops poised to invade Iraq on short notice after 8:00 p.m. Wednesday (0100 GMT Thursday), when time runs out on the 48-hour ultimatum issued Monday by U.S. President George W. Bush.

Safe-haven buying supported gold overnight, but selling kicked in at the New York open. COMEX April gold GCJ3 closed down $1.50 at $336.20 an ounce, trading from $341.00 to $434.30.

�For some reason people are less concerned. It�s not only gold. You are seeing it in other markets. So this is a rotation that�s going through a broad variety of markets,� said a bullion dealer at a large commercial bank.

The dollar rose $1.0560/63 per euro Wednesday afternoon, making gold more expensive to European investors. The Dow Jones Industrial stock average was up 2 points in seesaw trade after gaining almost 340 points since Monday on relief that months of waiting for war on tenterhooks looked almost over.

Financial markets got a confidence boost overnight from unsubstantiated reports that U.S. troops had moved into the demilitarized zone on the Iraq-Kuwait border.

Gold was also hit by market rumors Iraq�s Deputy Prime Minister Tareq Aziz had either defected to U.S. authorities or was shot trying to flee Baghdad. Aziz himself later appeared on Iraqi television to deny the rumors.

Spot gold XAU= closed at $335.50/6.26, down from $337.50/8.25 late Tuesday. London dealers fixed the afternoon reference price at $335.80.

Gold has a history of price volatility in times of war�it rose more than $40 in the run up to the 1991 Gulf War, then gave it right back once the war started.

Futures hit a 6-1/2 year high of $390.80 an ounce on Feb. 5 in anticipation of war. But gold�s �war premium� evaporated this month as military action seemed imminent and futures closed just $4 above last week�s three-month low at $332.

�It�s buy the rumor, sell the fact, I guess. But I still tend to think markets are factoring in a very quick war without any obstacles and I think that�s a very big mistake,� said another bullion trader.

�Should he (Saddam Hussein) throw a wrench at us, we could see gold easily $5-$10 higher.�

Turkey said Wednesday it plans to open its airspace to U.S. warplanes, but would not allow them access to air bases, even for refueling.

Dealers said the development should help speed the war, even though it fell short of original discussions on allowing some 62,000 U.S. troops to use Turkey to launch a northern front against Iraq.

May silver 0#SI: fell 4.3 cents to $4.42 an ounce, trading between $4.495 and $4.415. Spot silver XAG= was last at $4.41/43, down from $4.46/48 at the previous close. The fix was $4.48.

NYMEX April platinum 0#PL: fell $15 to $671.70 an ounce. Spot platinum XPT= was at $675.00/680.00 an ounce.

�The industrial metal still remains in its broad $660-$700 range though, as supply concerns are keeping the metal supported as strike action at world no. 2 producer Impala steps up gear,� wrote James Moore, of TheBullionDesk.com.

June palladium 0#PA: eased $2.60 to $233.30 an ounce. Spot palladium XPD= fetched $232.00/237.00 an ounce.