COMEX gold rallies again as dollar falls more
By Alden Bentley
NEW YORK, June 6 (Reuters) - COMEX gold extended its rally
to a two-month high on Tuesday, adding nearly $20 since Friday
on the back of a dollar selloff and a vicious squeeze on bears
who had sold expecting yet lower prices, dealers said.
The dollar fell to its lowest in nearly two months against
the euro and yen and to a one-month low against the Australian
dollar on Tuesday, amid indications the U.S. economy was
cooling well before inflation gets entrenched.
After pausing overnight, August gold in morning trade shot
to $294.50 an ounce, its highest since April 4. It closed at
$291.80, up $3.60 an ounce.
Spot bullion was quoted late at $288.60/9.60, near London's
11-week high late fix at $288.40, and up from Monday's New York
close at $285.10/85.
Benchmark futures have gained $19, almost seven percent,
since opening at $275.50 on Friday, the day speculators began
to panic out of short positions, which they accumulated while
pushing the price to an eight-month low of $272.20 on May 25.
"The dollar has dropped eight or nine percent over the last
two weeks and we've got the necessary response in gold catching
the shorts and taking some of fund positions out," said Bernard
Penner, bullion trader at Rudolf Wolff in New York. "Weakness
in the dollar certainly sparked this."
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