COMEX gold eased early Tuesday but found a floor above the previous session's seven-month low as the dollar back-pedalled from its overnight 15-day high against the euro.
Gold's link with the euro remains fast, traders said. Barring any surprises from the Middle East and the US war on terror that would rekindle safe-haven buying, they see gold's fortunes tied to the dollar.
Benchmark June gold was off $1.10 at $377.70 an ounce, trading from $380.20 to $376.50. On Monday it bottomed at $371.30, its cheapest since October 17, 2003.
Spot gold fetched $376.95/7.65, off from the close at $378.40/9.15. London's morning fix was at $378.00.
"During London time when the euro fell gold followed. Now I think the market has mixed feelings about gold," said a New York bullion trader.
"They like the way it held that $372 area yesterday and are just looking for a little bit of direction."
The euro fell to $1.1790 overnight and was quoted in the morning at $1.1822/25, just down from the close at $1.1825/29.
Investors have streamed back into the dollar to reap the higher yields resulting from bond market speculation that the Federal Reserve is about to increase interest rates from 45-year lows to prevent the economy from overheating.
The case for holding gold and other dollar-priced commodities weakened in the rising US interest rate environment, because of the increased opportunity cost of holding hard assets which bear no yield.
July silver was 10.0 cents lower at $5.665 an ounce, trading from $5.83 to $5.66. Spot silver was quoted $5.63/66, down from $5.73/76 late Monday. Bullion dealers fixed silver's price at $5.67 an ounce.
NYMEX July platinum was up $16.60 to $780.00 an ounce. Spot platinum traded at $783.00/788.00.
June palladium was up $1.60 at $237.60. Spot was indicated at $235.00/240.00.
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