US gold futures gyrated and edged up early on Tuesday, whipsawed by a lower dollar and profit-taking following strong gains last week, but larger-than-usual gold sales by central banks could dent sentiment in the short run, analysts said.
At 10:13 am EDT (1413 GMT), most-active August gold on the COMEX division of the New York Mercantile Exchange was up 50 cents at $676.80 an ounce, trading in a tight range from $674.50 to $678.80.
"We thought it was a little bit overdone over the last few days," said Joseph Guzzardi at Sabin Commodities from the COMEX floor. "We're looking for the market to give back a little bit." August futures gained more than $15 last week on inflation worries and a weaker dollar. Guzzardi said a lower dollar on Tuesday provided support to gold and silver prices.
The dollar fell broadly and traded near its three-week lows against the euro after Federal Reserve Chairman Ben Bernanke said he expected the US economy to continue growing but weakness in the housing sector would probably remain a drag.
Bullion investors largely shrugged off news that the Bank of Spain sold almost a million ounces of its gold reserves in May. The bank has been cutting its gold reserves steadily since the middle of last year. It also sold 1.3 million ounces, or 40 tonnes, in both March and April. UBS Investment Bank said in a research note that large central bank gold sales was not positive for the short-term outlook for gold.
"We are certainly not calling for the gold price to collapse but suspect that the next five or so dollars will be lower rather than higher," UBS said. The European Central Bank said Tuesday that gold and gold receivables held by eurozone central banks fell by 29 million euros to 179.995 billion euros in the week ending June 1. Spot gold traded at $670.85/1.35 an ounce, up slightly from $670.50/2.00 an ounce late Monday. The London gold fix was $671.50.
COMEX July silver rose 4.00 cents to $13.785 an ounce. It peaked at its highest since April 26 at $13.87 from a low at $13.72. Spot silver firmed to $13.73/13.77 from $13.69/13.72 late Monday. The London silver fix was $13.71. NYMEX July platinum was down $4.50 at $1,298.50 an ounce and September palladium fell $5.30 to $372.20 an ounce. Spot platinum was quoted at $1,291/1,296 while spot palladium fetched $365/368.
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