GOLD (Au) PRODUCERS

[NYBob]

PRECIOUS METALS: Comex Gold Pares Dollar-Inspired Gains
7 minutes ago
By Allen Sykora

Of DOW JONES NEWSWIRES

Gold and silver finished higher Tuesday in reaction to dollar weakness, although they trimmed their gains when the greenback recovered some and other commodities fell.

December gold rose $2.30 to $946 an ounce on the Comex division of the New York Mercantile Exchange and traded as high as $956.30. December silver rose 11.5 cents to $14.346 and got as high as $14.46.

"The lower dollar is supportive of the market," said Frank Lesh, broker and futures analyst with FuturePath Trading. "And stable equity markets are good for us also."

Investors often turn to gold as a hedge against dollar weakness. At one time, the metal tended to move inversely to equities, drawing support from the stock meltdown early in the year. But in recent weeks, they have tended to move together depending on the risk appetite of markets generally, in turn often based on how the dollar is faring.

Just before the Comex gold pit closed, the September dollar index was down 0.090 point to 78.240. The Dow industrials were around 50 to 55 points higher.

Still, the dollar pared its loss and equities were down from their highs, which may have played a role in gold's pullback from its peak.

Michael Gross, broker and futures analyst with OptionSellers.com, tied the retreat largely to moves in other commodities.

"The energy sector is getting clobbered and copper is down pretty good, so that is keeping a lid on any gains today," he said. Shortly after he spoke, Nymex October crude oil was $2.61 a barrel weaker, while Comex December copper settled 5.70 cents a pound lower.

When the gold's and silver's early upward momentum waned, they finished with inside days on a chart, in which the highs and lows were contained within the prior session's trading range. "That sets us up for a nice breakout tomorrow technically," said Larry Young, senior trader with Infinity Futures.

Overall, gold volume remained low in quiet summer markets, Lesh said.

"I think that's one of the reasons we're stuck in a range," he said. "It doesn't want to break out either way. The dollar is sort of range-bound as well, albeit with a downward bias."

Volume may not pick up significantly until after the Labor Day holiday, he added.

Lesh pegged support for December gold at $933 and $921. He put resistance at $956 and $958.

Gross pegged his support for December gold at $926.70 and resistance at $974.30. He put support for December silver at $13.53 and resistance at $15.225.

Meanwhile, December palladium gained $3.55 to $290 an ounce and hit a fresh high for the year of $292.70 an ounce. On the surface, the metal's continued strength appears to be a "head-scratcher," especially with the U.S. cash-for-clunkers program ending, said one trader. This has helped demand for platinum group metals in auto catalysts.

Nevertheless, speculative demand remains strong for the metal, with holdings in exchange-traded funds rising for some time now, he said.

Meanwhile, October platinum finished nearly flat - falling just 30 cents to $1,247.80 an ounce. The metal was unable to benefit much from a strike against Impala Platinum Holdings (IMP.JO) at its Rustenburg operations. The trader said market participants had already been anticipating some type of labor conflict and may think it won't last long.

"For now, it seems like the investment side of the market is turning a blind eye to it and not paying much attention to it," he says.

-By Allen Sykora, Dow Jones Newswires; 541-31...; [e-mail]


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