US MIDDAY: gold drops

New York gold futures dropped on Wednesday as a dollar bounce prompted the market to take a breather after a recent sharp rally on investment demand and hedge buying against a falling US currency. August down $6.80 at $977.60 an ounce at 10:34 am EDT (1434 GMT) on the COMEX division of the New York Mercantile Exchange. Ranged from $974.20 to $992.10.
Gold was under pressure as the dollar recovered from its 2009 lows after monetary sources in Asia told Reuters that they would keep buying US Treasuries even if the US credit rating were cut. Early profit-taking in gold futures seen, triggered by stop-loss orders as traders eye the weekly US crude inventory report later on Wednesday, said George Gero, vice president of RBC Capital Markets Global Futures.
August futures also weighed down by weaker US crude futures after government data showed that weekly inventory level climbed. The precious metals market could go parabolic to the upside as the American public becomes fearful of the prospects for the economy and inflation, said Dennis Gartman, independent investors and publisher of the Gartman Letter.
COMEX estimated 10 am volume at 52,479 lots. Gold/oil ratio at 14.26, slightly lower than the 14.30 of the previous session. Spot gold traded at $976.50, down 0.4 percent from its late Tuesday quote in New York. London gold fix $976.75 an ounce. July silver futures down 11.5 cents at $15.840 an ounce, driven by the dollar's strength. Ranged from $15.670 to $16.250. COMEX estimated 10 am volume at 16,457 lots.
The holdings of the iShares Silver Trustfell about 3 tonnes from the previous day's record high. Spot silver was at $15.81 an ounce, down 0.8 percent from its previous finish. London silver fix at $15.97 an ounce. NYMEX July platinum up $10.10 at $1,253.50 an ounce amid pent-up buying after recent weakness because of General Motor's bankruptcy filing.
On Tuesday, US auto sales posted an anticipated sharp drop in May, with GM down 30 percent, Ford 24 percent lower and Chrysler down 47 percent. The global car industry accounts for 60 percent of total platinum demand for use in automobile catalytic converters. Spot platinum at $1,247.00 an ounce, up 0.7 percent from its late Tuesday quote. September palladium down $6.05, or 2.4 percent, at $245.30 an ounce, as a stronger dollar prompted profit-taking. Spot palladium was at $242.00 an ounce, down 1.8 percent from its previous finish.