US gold futures fell almost 1 percent but ended above a three-week low on Monday, as traders unwound last week's safe haven bets after Iraqi voters defied insurgents to vote in the weekend election, dealers said. Benchmark April delivery gold shed $4 to close at $424.10 an ounce on the New York Mercantile Exchange's Comex division, after dealing from $428.90 to $421.50. Front-month February also lost $4 to finish at $421.80 on its first notice day for delivery, after trading between $426.50 and $419.30.
"I think we got some flight-to-quality liquidation. Some folks had bought this thing thinking there would be a problem with the election; they all bailed out," said James Quinn, AG Edwards & Sons commodity commentator.
Dealers believe gold should find support from bargain hunters down near the $420 area, though resistance near $430 should continue to cap prices for now, barring any dramatic breakout related to sharp currency moves.
The dollar was mostly up on Monday as investors dug in for another US interest rate increase after on Sunday's election in Iraq passed with only sporadic violence. The dollar pared gains to hold at $1.3041 against the euro.
Iraq's interim prime minister vowed to unite the country's competing ethnic and religious groups, trying to build broad support a day after more than 8 million voters cast ballots.
For the week ahead, markets are awaiting a rate decision on Wednesday, US jobs data on Friday and a weekend meeting of Group of Seven policymakers.
The Federal Reserve is widely expected to raise rates by a quarter point to 2.5 percent. That would lift returns on US deposits further above those in the Euro zone, where rates are seen staying at 2.0 percent for most of the year.
Chinese officials said over the weekend their country was in no rush to reform it's pegged exchange rate. European officials and US have urged China to let its yuan currency strengthens to help balance global growth and resolve the huge US current account deficit.
The latest weekly CFTC Commitments of Traders report showed the net fund long position in Comex gold slid to 28,345 contracts as of January 25 from 29,566 lots a week.
Commenting on the data, IFR Markets senior commodity analyst Tim Evans said funds appeared to be holding their biggest short position in gold futures since February 20, 2001. Even though the fund net long exposure still outweighed shorts by 107,378 lots to 79,033 lots in the data, the tension between bulls and bears was now tighter, he said.
Evans pegged technical support in April gold at $422.70, and then at the January 7 low at $419.30, followed by $413.50 and then $401, with initial resistance viewed at $430.60.
Spot gold last was quoted at $422.25/3.00, compared with Friday's New York close at $426.00/6.80.
The afternoon London fixes was at $422.15. Comex March silver fell 4.8 cents to end at $6.747 an ounce, after trading from $6.81 to $6.62. Spot silver last was worth $6.72/75, versus on Friday's late New York quote at $6.77/80.
On Monday's fix was at $6.72. Nymex April platinum rose $1.50 to $873.80 an ounce. Spot platinum held steady at $869/873. March palladium slipped $1.75 to end at $190.40 an ounce. Spot last fetched $187/190.
Comments
Comments are closed.