Gold firmed early Tuesday, with buying tied partly to a softer dollar, and analysts and traders continued to put a positive spin on the investment outlook for precious metals, despite the recent shakeout.
Silver was also up, with the market eager to see whether a new silver investment vehicle would get regulatory approval. But Platinum was the biggest gainer in morning trade.
Gold for April delivery at the COMEX division of the New York Mercantile Exchange was up $2.80 at $559.80 an ounce, trading from $555.10 to $561.20. It fell $4.20 on Monday as part of a broad retreat in precious and industrial metals.
"There was some overseas buying," said James Quinn, commodities commentator for A.G. Edwards. "We think it was currency related."
Research firm CPM Group said on Tuesday that investment demand for gold will remain strong in 2006, although it will fall 3.2 percent from last year, supported by the economic and political uncertainties that stoked the rally of the last five years. It predicted the gold price would average $502.34 this year, up 12.6 percent from the 2005 average price of $446.42.
CPM's 2006 Gold Yearbook released Tuesday predicted that investors would boost their gold holdings by another 45.2 million ounces this year, after adding 194.5 million ounces to portfolios in the bull market from 2001 through 2005.
Spot gold was quoted at $555.90/6.60, up from the close at $554.70/555.50 on Monday. Tuesday's morning fix by London bullion dealers was at $556.50. May silver was up 3 cents at $9.725 an ounce, steadying from a 13.1-cent fall the previous session. The morning range was $9.650 to $9.79. Spot silver rose to $9.67/70 from $9.64/9.67 late Monday. It's fix was $9.6950.
Future fund demand for silver could be determined by a ruling expected soon from the Securities and Exchange Commission on a proposed exchange traded fund for silver. NYMEX April platinum was up $15.90 at $1,050.80 an ounce. Spot fetched $1,049/1,053. June palladium was up $7.50 at $293 an ounce. Spot palladium was at $284/288.
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