Gold Lower but Close to 6-Year Highs
Tue January 14, 2003 05:54 AM ET
>>The dollar EUR= JPY= extended losses against major currencies, falling to a four-month low against the yen as investor nervousness grew about the state of the U.S. economy ahead of key U.S. retail sales data.<<
LONDON (Reuters) - Gold fell in European trading but investor jitters surrounding a possible war in Iraq and fresh weakness in the dollar kept the safe-haven metal close to its highest level in nearly six years on Tuesday.
Spot gold XAU= was quoted at $353.60/354.35 an ounce by 5:42 a.m. EST, compared with New York's last quoted $354.50/355.10 but still in sight of last week's near six-year traded high of $356.50.
The session's losses were tied to falling oil prices OILOIL which reduced interest in gold as a protection policy against inflationary pressures due to higher energy prices.
But renewed dollar weakness and prospects for war in Iraq underpinned the metal, analysts said.
"Gold should continue $348-357 for the moment with intra-day day direction coming from the funds and the dollar," said James Moore, metals analyst at TheBullionDesk.com.
"Ultimately I would look for a test higher again, with the war premium firmly underpinning the market around $345, as the prospect of a U.S./Iraq war and ongoing tensions between U.S./North Korea remain high," Moore said.
Bullion was set or "fixed" on the London morning session at $353.75 a troy ounce, up from the previous fix of $352.55.
The dollar EUR= JPY= extended losses against major currencies, falling to a four-month low against the yen as investor nervousness grew about the state of the U.S. economy ahead of key U.S. retail sales data.
The dollar also lost half a percent against the euro, trading near a three-year low around $1.06. It was down a third of a percent against the Swiss franc and sterling.
"Further strength of the euro is providing support and limits the downside in a highly uncertain macro and political environment," said Barclays Capital in a market note.
Traders will be monitoring the release at 1330 GMT of U.S. December retail data. Economists polled by Reuters see the figure excluding autos to have grown by a paltry 0.2 percent, compared with a rise of 0.5 percent in November.
Weaker-than-expected figures could see the dollar wobble back down to recent three-year lows against the euro, enhancing bullion buying power for European investors.
"With the dollar looking anemic and geopolitical tension continuing to build we continue to favor a move higher in the metal over the next few weeks," said John Reade, metals analyst at UBS Warburg.
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