NY gold stalls on lower ground early, tracks euro


NEW YORK, April 25 (Reuters) - U.S. gold futures eased in lackluster trade on Monday morning as a weaker euro triggered sell signals in the precious metals, dealers said.

By 10:24 a.m. EDT, June delivery gold was down $1.30 at $434.30 an ounce on the New York Mercantile Exchange's COMEX division, moving from $436.60 to $434.

"The market is down because the euro is down. Gold traders tend to keep an eye on the European currencies," said a broker at a futures commission merchant.

"Morgan Stanley offered about 1,500 lots in gold to the trading ring earlier and the floor took them," he added.

Volume was light at an estimated 12,000 lots by 10 a.m.

Metals prices dipped broadly on Monday as the euro sank after data showed German business sliding to a 19-month low, while talk China could soon revalue its currency boosted the yen.

Any revaluation of the yuan -- pegged near 8.28 to the dollar for the past decade -- is seen sparking a rally in Asian currencies.

Nonetheless, the dollar remains in a tight range. Gold and the dollar have had a 97 percent inverse correlation since 2000 as the metal is viewed as an alternative to the U.S. currency.

Against the dollar, the euro slid to $1.2970 from Friday's close near $1.3049.

CFTC Commitments of Traders data issued after Friday's close showed the net speculative fund long position in COMEX gold futures edged to 114,392 contracts as of April 19, from 113,344 lots on April 12.

Despite the modest amount of long accumulation in the latest week, it was the funds' largest degree of vulnerability since Dec. 7 when the exposure topped out at 132,347 lots, said IFR Markets analyst Tim Evans.

The pace of the accumulation over the past few weeks was not impressive and June gold faces an uphill battle from here, technically speaking, Evans said.

"The contrast between the size of the position held and the longer-term look of the price chart is certainly bearish," Evans said in a report.

He pinpointed resistance at $437.40, $438.50-442.50, and $445, with support at $433.50-433, $423.50 and $414.

Harmony , the first of three major South African gold producers reporting this week, has posted a deeper third-quarter loss due to a strike, restructuring and a strong rand that has battered the country's gold mining sector.

Harmony Gold Mining Company Ltd. has been one of the worst-hit mining firms in the world's biggest gold-producing country as the rand strengthened by more than 130 percent against the dollar between the end of 2001 and the end of 2004.

Markets were largely awaiting Thursday's first reading of first-quarter U.S. economic growth, which economists expect to fall to 3.6 percent from 3.8 percent in the prior quarter.

Spot gold dipped to $432.60/3.40 an ounce from Friday's close in New York at $433.70/4.50. Monday's afternoon fix in London was $432.90.

COMEX May silver fell 7.0 cents to $7.205 an ounce, a session low, after slipping from a high at $7.30.

Players are actively rolling May positions into next active July futures before first notice day for delivery on Friday.

Spot silver fell to $7.18/21 from $7.25/28 on Thursday. The fix was at $7.215.

NYMEX July platinum stood at $875.50 an ounce, down 50 cents. Spot platinum fetched $874/878.

Thinly traded June palladium fell $1.50 to $200 an ounce. Spot palladium was quoted at $199/202.



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