Gold pushes higher in Europe as dollar declines
Reuters, 03.31.03, 5:37 AM ET
LONDON, March 31 (Reuters) - Gold bullion forged higher during mostly routine Monday trading in Europe, bolstered by the weakness of the dollar <EUR=> and safe-haven buying, traders said.
Gold <XAU=> was fixed at $335.35 an ounce, up from the Friday afternoon fix of $330.75 and its highest fixing since March 20.
Spot rose to $335.25/336.00 by 1027 GMT from $331.60/332.20 previously.
"People are marking it up with the dollar, and we could see this firmer trend continuing," one trader said.
The dollar fell to a two-week low against the yen and euro, hurt by increasing scepticism about a speedy end to the war in Iraq and by nervousness about the U.S. economy.
Global investors are worried that a protracted war would lead to an increase in U.S. fiscal spending, dulling the appeal of dollar assets.
Oil prices also rose, with traders focused on the Iraq war and renewed weekend violence that kept about 40 percent of Nigeria's crude output off the market. This should also help cement positive moves for safe-haven investments such as gold.
"The chief reason for the latest move (in gold) has been the softer dollar, and this has been a little helped by weaker stocks (markets)," another trader said.
"Of course, all eyes will still be on Iraq to see how that might affect things, although we're expecting a relatively quiet day for gold if nothing dramatic happens " he said.
Bullion's European gains followed on from Asia overnight, where financial year-end factors also came into play. March 31 was the last day of the Japanese government's fiscal year and most corporate financial years in Japan.
"We are seeing some buying because they think the war will be extended," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
"It is also month-end and year-end, so the Japanese on the long side will want to push it up," said Leung.
European traders said business was low-key, and gold was likely to range comfortably above $335.00 in the short term.
"...it is important to see if gold can hold onto these gains...support should be found at the 200-day moving average of $329 an ounce," broker ScotiaMocatta said in a report.
Overhead the first target was $338.00, then $340.00, although the latter might be hard to attain.
"The dollar will really have to do something special (on the downside) for gold to get to $340.00," the first trader said.
SILVER NUDGES HIGHER, PLATINUM FIRM
Silver <XAG=> was quoted at $4.46/4.48, versus $4.43/4.45 at the New York close, aided by gold's strength.
"The white metal appears set to try and break out of its recently established $4.34 and $4.45 trading range, but will probably need a helping hand from gold," Standard Bank London said in a report.
In the platinum group metals, platinium <XPT=> rose to $644.00/649.00, up from $634.00/639.00 previously, following on from firm TOCOM levels.
Palladium <XPT=> sagged, however, as TOCOM recorded new five-year lows.
It was quoted at $180.00/185.00 an ounce, down from $189.00/196.00 and near its lowest in more than five years.
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