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NY gold ends at a 4-day low amid technical selling

NY gold ends at a 4-day low amid technical selling
Mon Mar 6, 2006pm ET

NEW YORK, March 6 (Reuters) - U.S. gold futures settled a volatile session down nearly 2 percent on Monday amid chart-based selling, with additional pressure seen from weaker oil prices and a firmer U.S. dollar, sources said.

"We viewed this as very technical ... very chart-based," said David Meger, metals analyst with Alaron Trading.

"We saw the writing on the wall as we started slowly in the early part of the day inching through some key support levels and when that type of attitude never stopped, it just continued and hit stops below different levels," Meger added.

Gold for April delivery ended the day down $11.20, or 1.97 percent, at $556.80 an ounce at the COMEX division of the New York Mercantile Exchange, after dealing from a one-week low at $553.50 to $570.20.

Meger saw initial resistance in April gold at $564.50, and then at $569.50.

The failure to breach the $570 level caused some investors to take profits and as the prices began to fall through support levels, funds began dumping their long positions, adding pressure to the downside, dealers said.

Benchmark futures hit a 25-year peak at $579.50 on Feb. 2, before profit-taking pressured prices down to a recent low at $537.80 on Feb. 14.

Midafternoon in New York, the euro was trading at around $1.2005, after a brief dip below $1.20, down 0.3 percent from late Friday and almost a full cent below a one-month high of $1.2093 earlier on Monday.

Gold moves in opposition to the dollar usually as many investors use the metal as an alternative to the currency.

Meanwhile, U.S. crude futures fell below $62 per barrel as investors took profits from strong gains last week, and on expectations OPEC would keep production unchanged when it meets later this week.

Safe-haven buying would continue to support the market, traders said, amid a standoff over Iran's nuclear aims.

Iran vowed on Monday to be a "killing field" for any attackers, responding to a U.S. warning of "painful consequences" if it failed to curb its atomic plans.[nRON642776]

Spot gold last fetched $555.60/6.50, up from late Friday's $564.90/5.80. Monday's afternoon fix was at $565.25.

Looking to gold, the Commodity Futures Trading Commission's Commitments of Traders data showed the speculative net long position in COMEX gold rose to 127,370 contracts by Feb. 28, from 118,684 contracts as of Feb. 21. The nonreportable net long position fell to 29,491 lots from 31,269 lots previously.

Silver for May delivery sank 2.05 percent, or 21.0 cents, to finish the day at $10.025 an ounce, moving from $9.920 to $10.29. On Friday, benchmark May silver charged up to $10.33 an ounce, its loftiest level since early 1984.

Speculation that the U.S. Securities and Exchange Commission would soon approve a silver-backed, exchange-traded fund (ETF) fueled last week's rally to 22-year highs.

"We believe that if the ETF is approved, silver could easily trade to $12 an ounce. But we recommend lightening some silver longs into any rally following ETF approval and recommend waiting for the launch of the ETF to judge whether this will be a flash in the pan or something more significant," said John Reade, precious metals strategist with UBS.

Spot silver was last quoted at $10.02/05, down from Friday's close at $10.19/22. Monday's daily spot reference rate was fixed at $10.22 in London.

NYMEX April platinum plummeted $19.10, ending at $1,043.40, just off the bottom of its $1,043 to $1,068.80 trading range. On Friday, platinum hit a three-week high at $1,070. Spot fetched $1,039/1,044.

June palladium sank $10.05 at $298.40 an ounce. Spot palladium was last at $294/298 an ounce.


LINK: http://yahoo.reuters.com/news/articlehybrid.aspx?type=comktNews&storyid=urn:newsml:reuters.com:2...