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COMEX gold stuck near flat in early trade

NEW YORK, June 21 (Reuters) - COMEX gold was circling the break-even level early Friday, pausing after Thursday's surge with the market still supported by a sickly dollar and nail-biting over global instability and future terror attacks.

August gold at 0942 EDT was up 20 cents at $323.90 an ounce, trading quietly between $325.00 and $322.80.

Spot gold was indicated at $323.00/3.50, up from $323.10/3.60 at Thursday's close. Friday's early fix by London bullion dealers was $323.50.

Dealers took comfort from gold's resilience since correcting from the contract and 2-1/2 year highs above $330 an ounce two weeks ago, even as long liquidation lowered open interest from near 200,000 contracts to 168,898 on Thursday.

"The funds who got out are happy to get back in with the price still up here," said one bullion dealer. "They are right for the first time in a long time and some of them got out, but I think some are happy to get back in especially with dollar looking the way it has."

But momentum has flagged because so many players are still long. Floor brokers reported light stop buy interest above Thursday's high at $325.40 an ounce in August.

Speculators were net long 46,456 contracts (144 tonnes) as of last Tuesday. The CFTC releases its weekly Commitments of Traders report after the close of business Friday.

Investors have stampeded into gold this year, fleeing the dollar and U.S. equities amid jitters about earnings, corporate accounting, economic recovery and hot spots like the Middle East and the Indian subcontinent as the United States wages its war on terror.

"Gold and silver are mirroring the stock market," said Donald Tierney, of Pell Brothers Futures. "The Dow Jones was down 90 and gold made a new high, the Dow Jones recovered and gold came right back off."

The Dow fell 84 points in early trade then recovered to show a 25 point loss in mid morning trade.

July silver was off 2.5 cents at $4.845 an ounce, trading narrowly from $4.905 to $4.825. Spot silver was at $4.84/86, off from $4.86/88 at the close and $4.88 at the fix.

"There's a little bit of light fund selling in silver, a little profit taking," said a floor broker, adding that banks were buying on weakness.

NYMEX July platinum was down $4.10 at $565 an ounce, pulling back from a contract high at $572 hit Wednesday. Spot platinum was at $561/566.

September palladium was down $2.15 at $330.50 an ounce, setting a new contract low at $328.20. Spot palladium was last quoted at $325/335.

Commission house sell stops were triggered against the old low at $330 from Tuesday. "The funds have been aggressive, aggressive sellers against this $333-$338 level from last week," said Ralph D'Esposito of RJ Futures. "Open interest is up significantly. So they were anticipating this break as well."

"On balance, this market is going to be groping for some sort of a bottom at these levels," he said.