Gold in NY gains early on investor, trade buying Mon Mar 13, 2006 11:02am ET
NEW YORK, March 13 (Reuters) - U.S. gold futures bounced from Friday's two-month low on speculative and consumer buying on Monday morning, with a slightly weaker dollar also offering support to the precious metal, despite easier crude oil.
April delivery gold on the New York Mercantile Exchange's COMEX division had climbed $3.50 or 0.6 percent to hold at $544.80 an ounce by 10:36 a.m. EST, in a session range of $541.40 to $546.40.
Bargain hunting by investors and industry players bolstered futures after gold slid 1 percent on Friday to a two-month low on U.S. employment data that fanned fears of more dollar-boosting interest rate hikes.
"There was fresh demand from the subcontinent -- India, Bangladesh, Pakistan and that area -- so gold's higher today," said a broker in New York.
"Also, the dollar seems to be on the soft side today, which is helping gold," he added.
The greenback slipped against both the yen and euro after its broad-based rise on Friday to its high for 2006 against a basket of major currencies.
Gold fell as low as $534.50 an ounce Friday after U.S. data showed nonfarm payrolls rose 240,000 in February, up from a rise of 170,000 in January and above economists' expectations of a 210,000 gain.
Gold often has an inverse correlation to the dollar's moves as some currency traders use the metal as a dollar hedge.
Investment fund holdings in the U.S. gold market fell in the latest week, closely watched weekly data from the Commodities Futures Trading Commission showed.
The net fund long position in COMEX gold futures dropped to 120,889 contracts as of March 7, from 127,370 lots previously, according to a Commitments of Traders report on Friday.
No major economic data are due on Monday, but traders were awaiting U.S. current account data for the fourth quarter on Tuesday and a February housing starts report on Thursday for possible market reactions.
Spot gold last traded at $542.60/543.50 an ounce, vs. Friday's late quote in New York at $539.90/540.80. Monday's London afternoon fix was at $543.50.
Merrill Lynch said the gold market was at risk to further selling before it recovers, after bullion fell 4.3 percent in a week due to expectations for higher U.S. rates and for lower oil prices.
"We believe spot gold could fall to $525/oz in the near term, but the start of the second leg of the Indian wedding season last week should backstop it from going much below $500/oz, and could give gold a boost to $550/oz by late April," the investment bank said in a weekly note.
U.S. crude oil was firm above $60 per barrel on Monday. Higher prices tend to fan inflation fears and support gold.
COMEX May silver was up 4.0 cents at the pivotal technical level of $10.00 an ounce on Monday, dealing from $9.92 to $10.0350.
The net fund long position was up at 51,956 lots by last Tuesday from 44,622 lots a week earlier, CFTC data showed.
Spot silver traded at $9.97/10.00 an ounce, against $9.93/96 at Friday's late levels. It fixed at $10.0150.
NYMEX April platinum gained $4.80 to $1,017.50 an ounce in early trade. Spot platinum was indicated up $20 at $1,016/1020.
Lightly traded June palladium rose $6.90 to $296.50 an ounce. Spot palladium was worth $291/295.
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