NEW YORK, Nov 21 (Reuters) - COMEX gold rose early Friday after Canada's Barrick Gold Corp., long among the most active hedgers, said it was no longer committed to selling the metal forward to protect future production from falling prices.
The news underscored that the trend among producers to reduce their hedge books was still firmly in place. Along with the falling dollar, such "dehedging" has been a major factor in the 2003 bull market, which saw gold trade above $400 for the first time since March 1996 on Wednesday.
"It should be absolutely bullish," said James Pogoda, vice president of precious metals at Mitsubishi International Corp. "I thought we would be a bit higher. Any time we've gotten close to $400 it's been capped."
December gold at 10:10 a.m. EST (1510 GMT) was up $3.30 at $397.00 an ounce, rallying from a low of $393.10, just before Barrick said it was changing its policy, to $398.20.
Spot gold fetched $394.70/5.50, up from $393.30/4.00 at the close. London's morning fix was at $393.85.
Barrick Chairman Peter Munk told reporters in London that the company was cash rich and would do no more hedging over the next decade.
Barrick was considered perhaps the most sophisticated trader among the major producers, with one of the largest hedge books. Using options and forwards, it generated profits even when the spot price of gold in the late 1990s was below the cash costs of prying nuggets out of the ground.
With less producer selling to cap the market this year, gold rose relentlessly as investors diversified out of the dollar and sought safe havens as global political tensions mounted.
Gold gained momentum as the euro rose to a life-time high this week, before both succumbed to profit-taking as the dollar bounced back a bit.
The euro was little changed from Thursday's close in morning trade at $1.1908/13.
Floor brokers said December gold has taken out all the standing orders nearby when rallying to 400.70 an ounce Wednesday then falling to $392.00 Thursday. The market has to trade outside that $400.70 to $392 range to find more stop-loss buying or selling interest.
Most dealers are waiting for the euro to break above $1.20 to start buying again.
"Everybody was very bullish. It's been, volume-wise, very quiet," a gold broker said Friday morning. "They are playing the euro tick for tick."
Given the recent volatility, dealers said anything could happen on a Friday, especially with options expiring Monday on the COMEX and in London over-the-counter trade, and positions being rolled over before December delivery notices start on Wednesday ahead of a four-day U.S. Thanksgiving holiday weekend.
December silver was up 0.3 cent at $5.265 an ounce, trading $5.24 to $5.315. Spot silver was at $5.24/26, down from $5.25/27. It fixed at $5.235.
At the NYMEX, January platinum was $1.20 lower at $765.50 an ounce. Spot platinum fetched $765.00/770.00.
December palladium was off $1.50 at $195.00 an ounce. Spot was at $192.00/197.00.