Skip navigation
Newswire

NY gold ends off 6-yr high, with war clock wound up

NEW YORK, Dec 19 (Reuters) - Gold futures steamrolled to a near six-year high over $350 an ounce Thursday before the United States ended days of trader nail-biting saying Iraq is in "material breach" of a U.N. arms resolution.

The metal was already off its peaks when U.S. Ambassador to the United Nations John Negroponte used the term that could be used to justify war, citing omissions in Iraq's 12,000 page arms declaration and saying Baghdad had spurned its last opportunity to comply with its disarmament obligations.

Gold has soared more than 28 percent this year on safe-haven buying fired by fears of another Gulf War, a weaker dollar, falling equity markets and rising oil prices, making it one of the best performing financial assets.

Trade was expected to stay volatile through the year-end holidays starting next week. February gold hit $355.70 in overnight ACCESS trade, the highest for a benchmark contract since February 1997, putting gold up some 12 percent this month.

The contract closed up $3.80 at $346.50 an ounce, trading from a low of $343.30. Estimated volume was 63,000 contracts.

U.S. Secretary of State Colin Powell said after futures trade wrapped up that Iraq will have to face serious consequences if it does not meet its obligations to give up chemical, biological and nuclear weapons programs.

Spot gold closed at $346.00/75, up from $342.00/75 late Wednesday in New York. It hit $353.75 an ounce, its highest since March 1997. London dealers fixed Thursday's afternoon spot reference price at $345.00.

Dealers cautioned that the possibility of a war with Iraq is well priced in.

"The problem is there are some professionals that have tried to short this market and have had their heads handed to them in recent days," said Robert Gottlieb, head of bullion trading at HSBC.

Some fund managers were chasing gold, still trying to put their desired positions on.

"Despite how long this market is, it's a changing market," Gottlieb said. "We have a lot more types of investors in this market than we ever had before."

Dealers said some of the buying after New York closed on Wednesday came after U.S. coin and bullion dealer Blanchard and Co. said it had filed an anti-trust lawsuit against Canadian miner Barrick Gold Corp. and commercial bank JP Morgan Chase, accusing each of manipulating the gold market to keep prices weak.

Barrick dismissed the allegations in the lawsuit -- which the Gold Anti-Trust Action Committee (GATA), a conspiracy group, said it will assist -- as ludicrous and without merit. JP Morgan Chase declined to comment.

"The Blanchard suit kind of got things rolling in the aftermarket, I suppose, which I can't figure out," said a bullion trader. "It's clearly a frivolous thing."

Dollar woes also burnished gold's luster, as the greenback wobbled near recent three-year lows against the euro and hit a four-year trough against the Swiss franc , considered a safe-haven like gold.

Investors were also looking for alternatives to the jittery stock market, where the Dow Jones industrial average was down 89 points in the afternoon.

COMEX March silver rose 5.5 cents to $4.725 an ounce, trading in a $4.66-$4.79. Spot silver fetched $4.70/72, up from $4.65/67 late Wednesday. The fix was $4.72.

NYMEX January platinum fell $2.60 to $595.40 an ounce. Spot platinum closed at $593/598.

March palladium fell $8.20 to $239.60. Spot palladium was last at $236/243.