Reuters Market News
Early COMEX gold rebounds, Newmont refocuses bulls
NEW YORK, June 6 (Reuters) - COMEX gold found its footing early Thursday, with news that Newmont Mining expects to reduce its hedge book by another 1 million ounces in 2002 helping gold to base build after Wednesday's brutal bull market correction.
The announcement by Newmont, the world's largest miner after its merger this year with Australia's Normandy Mining and Canada's Franco-Nevada was perfectly timed to dissuade players from premature calls that Wednesday's $6.70 fall on the COMEX marked the end of the bull run.
"We've got to like that," said a desk broker. "Never short an uptrend."
The dollar fell back toward the week's lows early, also helping shore up gold.
At 0941 EDT, August gold was up $2.20 at $324.30 an ounce, trading $321.30 to $325.
"Sentiment overall remains much as before, in that the correction in price is deemed as necessary to unwind previously overbought conditions," wrote Rhona O'Connell, market analysis manager at the World Gold Council, in her daily commentary.
"It would look for now as if the performance of the currency and the equity markets will be the key with regard to short-term movements," the commentary continued.
The fall from Tuesday's contract high at $331.50 was the among steepest of the last year for futures, although not for spot bullion. But the metal found support above $320 and is still up about 15 percent in 2002.
The trend toward reduced forward selling and active hedge buy backs by producers has been a key to gold's rise to 2-1/2 year highs this year, along with low U.S. interest rates, a weakening dollar and geopolitical uncertainty and tensions.
Newmont Chief Operating Officer Wayne Murdy said the company, which is averse to hedging, is reducing the book of the former Normandy, whose multiyear hedges stood at around 7.3 million ounces at the end of March, down from 9.5 million in February.
"On that basis we would probably deliver another one million ounces through the balance of this year," Murdy told reporters in Adelaide, Australia.
One bullion dealer said gold stretched its rebound after about an hour of open outcry trade as the euro steamrolled back toward Tuesday's 16-month high against the greenback and the stock market turned down after Wednesday's 108-point recovery.
"Once the stock market opened and started to drop that gave us some more support," said a floor broker.
Spot gold (XAU=) was at $324.00/50, up from Wednesday's close at $321.15/65. The morning fix in London was $322.90.
On Monday the interbank price touched $331.40 an ounce, the highest since Oct 5, 1999.
Gold's safe-haven premium has not worn off either, although U.S. diplomacy appeared to be making some headway in heading off a border war between nuclear-armed India and Pakistan over disputed Kashmir.
Pakistan President Pervez Musharraf declared Thursday that he will not start a war with India. The countries have massed a million troops at the border since Islamic militant separatists attacked India's Parliament in December and an Army base recently in which 31, mostly women and children, were killed.
July silver continued to be yanked around by gold and was up 1.5 cents at $4.96 an ounce in a $4.915 to $4.98 range. It skidded 18 cents Wednesday, reversing its rally to $5.15 on Friday, its strongest since October 2000.
Spot silver (XAG=) was quoted $4.95/97, up from $4.93/95 late Wednesday. The fix was $4.935.
NYMEX July platinum (0#PL:) was up $4.70 at $554.50 an ounce. Spot platinum (XPT=) was quoted $550.50/557.50.
September palladium (0#PA:) was $3.50 higher at $353 an ounce. Spot palladium (XPD=) fetched $347/362.
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