US gold futures sank 1.35 percent Tuesday morning on speculative selling, and silver, platinum and palladium also fell, as a firm US dollar made precious metals less attractive to investors, dealers said.
April delivery gold had dropped $7.50 to $548.60 an ounce by 10:11 am at the COMEX division of the New York Mercantile Exchange, near the bottom of a $556-to-$547.60 range. It was the lowest for futures since March 14.
Gold futures and bullion probed below the recent, well-worn range of $550 to $560 an ounce, pressured by unfavourable moves in the dollar and crude oil, traders said.
Greg Weldon, independent analyst and publisher of the Metal Monitor report, said a decline in spot gold "below $547.80 would open the door for a test of key downside support defined at $533."
Spot gold fell to $547.10/548.00 an ounce, against Monday's late New York quote at $553.90/4.80. Tuesday's morning fix was at $553.
The dollar edged up after a core gauge of US inflation for February - core producer prices - rose a more-than-expected 0.3 percent. The news strengthened market views that the Federal Reserve may not be finished with dollar-boosting interest rates.
A metals floor source said players also were awaiting a news conference at 10 am (1500 GMT) with President George W. Bush, who is trying to regain Americans' confidence in his Iraq war strategy. On February 2, COMEX gold futures spiked to a 25-year high at $579.50, while bullion rose to a similar peak at $574.60.
An announcement, anticipated by traders, from Germany's Bundesbank that it would sell no substantial amount of gold from its reserves over the next six months was viewed as supportive.
Fifteen European central banks have promised to limit their total gold sales to 2,500 tonnes in the 2004-2009 period, compared with 2,000 in the previous five years.
COMEX May silver fell 19.2 cents, or 1.8 percent, to $10.17 an ounce, in a range of $10.3650 to $10.16. Spot silver sank to $10.15/10.18 an ounce, against $10.33/36 previously. It fixed at $10.28.
April delivery platinum shed $10.30 to $1,035 an ounce, slipping from a two-week high. Spot platinum traded lower at $1,032/1,036. June palladium dropped $7.50 or 2.3 percent to $314 an ounce. Spot palladium fell to $313/317.
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