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COMEX gold rallies on steep euro gains, silver shoots up
Reuters, 07.23.03, 11:30 AM ET

NEW YORK, July 23 (Reuters) - COMEX gold shot up to a one-month high Wednesday morning, shrugging off prior-day losses when the euro scaled a 16-day peak against the dollar, gold traders said.

The euro grabbed back all of Tuesday's losses and more on Wednesday when several official comments on foreign exchange intervention implied a more hands-off reaction to the dollars' recent declines.

"The spot (gold) market was firmer this morning; a strong euro and strong fund buying. That's also the case in silver. The currencies against the dollar were strong and that's what's prompting the buying in here," said Jimmy Quinn, commodities market analyst at AG Edwards.

August futures <GCQ3> on the New York Mercantile Exchange's COMEX division were up $6.00 at $356.80 an ounce, after earlier hitting its highest level since June 23 at $357.20.

Volume amounted to 26,000 lots by 1000 EDT.

A firmer euro and yen make dollar-denominated gold a more attractive investment in key European and Asian markets.

The euro <EUR=> soared to $1.1454/62 on Wednesday, its highest level since July 7. The day's low was $1.1314

Spot gold <XAU=> rallied to $356.50/7.25, up sharply from $350.50/1.00 in late Tuesday dealings, on euro strength. London dealers fixed the morning spot reference price at $352.20 an ounce.

U.S. stocks lost ground in early dealings as investors were dismayed by tepid forecasts from industry leaders Boeing Co. (nyse: BA - news - people) and AOL Time Warner (nyse: BA - news - people).

A declining stock market implies less confidence in economic growth, which increases gold's status as a safe-haven investment.

The break of $355 for COMEX September gold points to next resistance levels around prior highs at $357.70 and $365.70. Support rests initially at Wednesday's low of $350.30 and then the $340.60/80 area, traders said.

Silver launched a major move to the upside when gold began its ascent. Once it pushed above heavy resistance at $4.90 cents, brokers said it triggered massive stop-loss buy orders that sent it all the way to $5.00 an ounce.

COMEX September silver <0#SI:> steadied at a 14.0-cent gain at $4.93 an ounce after carving out massive gains in a range that ran from $4.79 to $5.00.

COMEX silver volume was 15,000 lots by 1000 EDT.

Spot silver <XAG=> surged to $4.91/93 from $4.75/77 late Tuesday. It was fixed at $4.8325.

October platinum futures <0#PL:> gained $4.60 to $692.50 an ounce. Spot platinum <XPT=> rose to $692.50/699.50.

September palladium <0#PA:> lost $2.95 to $163.00 an ounce. Spot <XPD=> was quoted lower at $160.00/165.00 an ounce.

Copyright 2003, Reuters News Service

http://www.forbes.com/markets/newswire/2003/07/23/rtr1034327.html