Comex gold went up another 1.6 percent on Friday after news of a record first-quarter US current account deficit caused a sell-off in the dollar on concern about US international trade competitiveness.
Both gold and silver hit 16-day highs as the dollar fell and the gold sector flexed its muscles on Wall Street amid market speculation about further consolidation and dehedging in the mining industry.
Comex gold rose to $396.90, its priciest since June 2 after the Commerce Department said the current account gap widened to $144.88 billion from a revised $126.96 billion in the fourth quarter of 2003.
The current account is the broadest measure of the nation trade with the rest of the world.
The days low was $387.20. "The euro rallied kind of late this that kind of spurred the gold then it got a second leg on the rally when the current account data came out," said a floor broker.
The euro rose to $1.2122/24 on Friday afternoon, from $1.2039/45 late on Thursday.
That is still well below the record high at $1.2927 hit in February as dollar diversification was lifting gold to 15-year highs.
Now the market is concerned the dollar sell off will resume as the booming US economy sucks in exports.
Gold's safe-haven premium has been growing since the precious metal hit a 3-1/2 week low at $382.50 on Tuesday as Iraqi insurgents step up deadly attacks before the US occupation authority turns over power to an interim Iraqi government on June 30.
Gold industry consolidation is coming back as a supportive them as well. The XAU index of North American gold and silver mining stocks was up 2.85 percent on Friday afternoon.
That was exceeded by a 3.4 percent gain in the HUI Gold Bugs index of companies that do not sell forward, or hedge, to lock in prices for metal that has not yet been mined.
"Any time the gold price goes up six dollars, you'll see the stocks rise," said a New York gold analyst who requested anonymity.
Steven Butler, an analyst with Concord Capital in Toronto said a two-day rally of gold mining companies might also be partly a result of market rumours which lifted bullion prices in London trading overnight that Denver-based Newmont Mining Corp was making a bid for Newcrest in Australia.
A Newmont spokesman declined comment. "I guess the idea is that if they merge with a company that is a hedging company they might want to lift the hedges," said a gold trader at a bullion bank. Newmont is an avowed non-hedger.
Spot gold rose to $394.90/5.65 from $388.75/9.50 late on Thursday.
The afternoon fix in London was at $395.10. Comex July silver went up 5.8 cents to $5.983 an ounce, trading $5.86 to $6.045. Spot silver last fetched $5.97/99, up from the previous close at $5.71/73.
London's fix was $5.95. Nymex July platinum jumped another $15.30 to $809.30 an ounce on bargain hunting from the fall to Tuesdays five-week low at $767. Traders said industrial interest from jewellery and auto manufacturers picked up below $800 an ounce.
Spot platinum was quoted at $805.00/810.00. September palladium went up $3.10 to $230.00 an ounce. Spot palladium closed at $225.00/230.00.
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