NEW YORK, Jan 31 (Reuters) - COMEX gold futures jumped at the open Friday on continued worries over possible war in Iraq, but then the bulls got their hopes dashed as the dollar and Wall Street rose on upbeat economic reports.
"The dollar is rallying and that's why gold failed on its rally. And stocks are improving too," said one floor broker.
April gold on the New York Mercantile Exchange's COMEX division was $1.70 higher at $368.0 an ounce, trading $368.70 to $372.70.
Early COMEX gold volume slowed to an estimated 8,000 lots after a week of trading at a much more brisk pace.
By mid-morning, spot gold traded at $367.70/8.45, up from Wednesday's close at $366.35/7.10. Thursday's London gold fix was $363.
Some players may to try to sell ahead of the weekend, one trader said, "I think a lot of people came in here long from yesterday. You saw some funds take some profits earlier on. The market held nicely on the dip on the opening, Then rallied and ran into light resistance. Then the dollar started to rally and some selling came in. The floor started selling it, because of the dollar rally."
One chartist said, "Below $366, we're going to be in trouble, but $367.60 on April gold is first support.
Several sound U.S. economic reports weighed heavy on gold, after the dollar and stocks sailed higher on the news.
Specifically, the January Chicago Purchasing Managers index showed marked improvement with a jumped to 56 from a revised 51.7 in December, beating analysts expectations for a lower number. The index had slipped in September and October.
Earlier, the University of Michigan's sentiment survey fell somewhat in January, but still showed vigor.
And, consumer spending picked up to its fastest pace in five months in December as U.S. shoppers, reassured by solid income gains, spent freely on long-lasting manufactured goods.
U.S. equities fell at the open on Friday, but quickly turned higher on the economic data, undermining gold.
As part of a final round of diplomacy, President Bush meets British Prime Minister Tony Blair at Camp David on Friday, for a strategy meeting about their next move to try to make Iraqi President Saddam Hussein comply with U.N. arms demands.
With a decision on whether to go to war against Iraq just weeks away, Bush and his staunchest ally Blair will discuss how to make Baghdad disarm.
A news conference after the leaders' meeting will likely take place after gold players have left for the weekend.
COMEX March silver futures lost 1.0 cent to $4.87 an ounce, in a range between $4.835 to $4.91 an ounce.
Spot silver changed hands at $4.82/4.84, even with Wednesday's late quote. Silver was fixed 6.50 cents lower in London at $4.785.
Platinum traders took a break in their brisk buying spree, which sent the precious metal to $673 Thursday, its highest since September 1986, Just the same, platinum kept a bullish tone, and one technician said he sees a next target at $700.
NYMEX April platinum futures rose $6.70 to $654.50 an ounce. The session range was $650 to $655. Spot platinum fetched $668/$676, above $662/$667 late Thursday.
NYMEX March palladium fell $1.15 to $257 an ounce, in a tight $1.50 range. Spot palladium traded at $253/258, down from $256/$266 at the previous close.