US gold futures rallied to a seven-week high on Thursday, as fund and speculator buying across the metals complex and bullion's decoupling from the US dollar buoyed prices, dealers said. Gold for August delivery gained $7.00 to end at $437.90 an ounce on the New York Mercantile Exchange's Comex division, the highest settlement for futures since April 29.
It traded from $430 to $438.50. Prices broke above first resistance at $432 an ounce in trade and ultimately shot past the next key barrier at $435 on waves of broker and investment fund buying.
"There's huge fund buying in gold, both short covering and perhaps new longs," a broker at a futures commission merchant said. Renewed optimism in some quarters of the market also was evident, as gold seemed to be de-linking from the euro/dollar after a tight correlation over the past several years.
With bullion apparently appreciating against a host of currencies, like the euro and yen, some saw the metal emerging as a genuine investment alternative in its own right.
"To me, it's one of the most interesting things to happen in the gold market for a few years," said John Reader, precious metals analyst at UBS in London.
"The performance of gold means you can make the case that gold's now a genuine diversifier (asset) of the dollar." Merrill Lynch said gold's resilience despite a weaker euro and stronger dollar was partly due to "very strong first quarter demand," particularly in China and India. "Prices are starting to turn upwards in most non-US currencies," Merrill said in a report.
"With underlying demand showing strength despite higher local prices, we consider this bullish for bullion." Euro-priced gold hit an all-time high on Thursday at just over 361 euros.
It was the fifth straight session holding above the technically significant 350 level. However, in dollar terms analysts see stiff resistance at around $438 in spot gold and $440/441 on Comex, before prices can take a run at the high set in late 2004 near $460 an ounce. Chartists put support at $423 and in levels below $420.
Spot gold was worth $435.80/6.50 an ounce at the New York close, its highest since late April, and compared with $428.85/9.60 late on Wednesday.
The latest London fix was $433. The dollar rose in choppy trade, mostly shrugging off US jobless claims and housing starts data that proved softer than expected. Euro sentiment remained beset by questions about political integration in Europe, analysts said. The euro traded at $1.2094, off from late on Wednesday but above that day's nine-month low at $1.2014.
US weekly jobless claims were 333,000, a bit above forecasts for 330,000. Housing starts in May rose to a 2.009 million annual rate, below expectations for 2.048 million. July silver rose 4.0 cents to close at $7.37 an ounce, after trading between $7.32 and $7.445. Spot silver reached $7.32/35 an ounce, versus $7.29/32 previously.
It fixed at $7.375. July platinum rocketed up $9.10 to $891.50 an ounce its highest close on a spot basis since late January, according to Reuters charts.
Spot platinum hit $884/889. September palladium slid 55 cents to close at $190.40 an ounce. Spot traded to $186/190.
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