US gold futures slipped on Wednesday toward four-month lows as the euro further lost value against the dollar, while silver bolted to a 2-1/2-month peak on speculative buying, dealers said. The euro dropped to an eight-month low against the dollar on heightened worries about economic stability in the euro zone, which dampened investor demand for US dollar-priced gold.
August gold futures fell $1.20 to $417.70 an ounce on the Comex division of the New York Mercantile Exchange, which was the weakest active-month settlement since February. The day's range ran from $419.90 to $416.70.
Traders said funds were ditching gold this week as the dollar moved higher, leaving gold hemmed between support at $414-410 and resistance at about $420.
"The mix of currency-related selling and physical buying looks set to continue over the course of the week with the battle likely to reach boiling point with the release of May's nonfarm payrolls" on Friday, said TheBullionDesk.com in a market note.
The euro dropped after a report that possible failure of the European Monetary Union, the system that spawned the euro, was discussed at a meeting attended by high-level German financial officials. Market concerns had been stoked by a "no" to the EU constitution in France over the weekend.
Voters in the Netherlands are expected to reject the charter by a wide margin on Wednesday. The euro was down at $1.2229.
Spot gold finished at $415.65/416.15 an ounce, below on Tuesday's late quote in New York at $416.50/7.20.
On Wednesday's London afternoon fix was $415.35. The World Gold Council said first-quarter demand was 977 tonnes, up 26 percent year-on-year, lifted by jewellery and investment purchases, while supply rose 23 percent to 1,043 tonnes, mostly on increased central bank sales.
"We should see a quick rally in silver to perhaps over the $8 level and once the trading funds cannot take the pain anymore, they will buy back their short positions at a loss and the banks will sell on top of them, causing a quick move down in price," Morgan said in a note on Wednesday.
July silver futures rose 6.8 cents to $7.52 an ounce, after trading from $7.39 to $7.61, which was their priciest since mid-March. Spot silver reached $7.49/52, against $7.42/45 late on Tuesday in New York. On Wednesday's London fix was at $7.38.
Industry sources told Reuters last week that leading exchange-traded fund provider Barclays Global Investors plans to start a silver ETF and will seek approval from market regulators in the next two months.
In Nymex metals, July platinum rose $9.70 to $871 an ounce, after notching a two-week high near $875. Spot platinum last was worth $868/871.
September palladium slipped 75 cents to close at $184 an ounce. Spot was stuck at $182/185.
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