Gold futures fell early in New York on Wednesday, after an almost two-percent rally on speculative buying a day earlier, as a stronger dollar and lower oil promoted investors to lock in profits. Silver, platinum and palladium also traded down, after the precious metals all reached new peaks on Tuesday.
At 10:07 am EST (1507 GMT), most-active gold for February delivery on the COMEX metals trading division of the New York Mercantile Exchange was down $3.80 at $642.10 an ounce, trading between $640.70 and $647.50 an ounce. The February contract hit a seven-week high of $647.50 during electronic trading after Tuesday's open-outcry session ended.
"We came off a bit on some profit taking because of yesterday's move. Between Friday and yesterday, we've seen some pretty good upside," said Carlos Perez-Santalla at Hudson River Futures. Gold jumped more than one percent on Friday, and has gained about 2.2 percent since then.
Perez-Santalla said he expected to see some consolidation with COMEX options expiring at Thursday's market close, and over-the-counter options expiring Friday morning.
"Once those options expirations are out of the way, we expect to see higher prices," Perez-Santalla said. Spot gold was quoted at $641.90/2.65 an ounce, compared with $646.00/7.00 traded late Tuesday. London's gold fix was $642.10.
James Moore, analyst at TheBullionDesk.com, wrote in a daily note that spot gold's next target would be the band of resistance between $648 to $656. "But with the dollar running into pressure and oil prices stabilising above $50 a barrel, the outlook for gold remains positive," he added.
Moore also noted that President Bush's State of the Union address offered little direction to the market, however, Bush's pledge to increase spending on alternative fuel sources might help fuel-cell technology, potentially boosting demand for platinum.
UBS analyst Robin Bhar also called Bush's address "a positive move for platinum autocatalyst" as the president's urge to use clean diesel and biodiesel might encourage Americans to buy more diesel-powered cars and trucks.
Platinum and palladium are employed in varying amounts in autocatalysts to filter out carbon monoxide and particulate emissions. While palladium is a more efficient catalyst in gas engines, platinum is primarily used in diesel vehicles. Platinum fell from its previous session's seven-week high. NYMEX April platinum was down $10.20 at $1173.00. Spot platinum fetched $1,164.00/69.00.
NYMEX March palladium dropped $2.05 to $348.30 an ounce, after reaching a four-month high on Tuesday. Spot palladium was quoted at $344/349.00. In other news, British platinum specialist Johnson Matthey Plc's chief executive said the company's catalysts division continued to grow from increased sales of heavy duty diesel catalysts following the introduction of new emission regulations in Europe and North America.
China's fast-growing platinum jewellery market is expected to expand sharply in the next five to 10 years as a new wave of baby boomers get married, an industry marketing body official said.
In other precious metals, COMEX March silver was down 6.5 cents at $13.195 an ounce, trading between $13.160 and $13.345. Spot silver fell to $13.100/3.170, against $13.21/3.28 an ounce in late Tuesday trade. Silver was fixed in London at $13.200 an ounce.
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