US gold futures edged down in mixed trade early Tuesday, whipsawed by weaker-than-expected April consumer prices and a lower dollar against the euro. At 9:58 am EDT (1358 GMT), most-active gold for June delivery on the COMEX division of the New York Mercantile Exchange eased 70 cents to $669.40 an ounce, trading between $666.60 and $672.90.
Gold traded up amid a mixed bag of signals including the tamed inflation data and expectations for a future US interest rate cut that might weaken the dollar. "It's just simply whatever hot money is in the system at the time will determine the market move," said Bernard Hunter, director of precious metals marketing at ScotiaMocatta.
Hunter added that gold's early gain was just a short-term reaction to the CPI numbers. The dollar fell against the euro on Tuesday as investors focused on the outlook for US interest rates after core consumer price data met expectations. A lower greenback makes dollar-denominated assets like gold cheaper for investors holding other currencies.
"We are testing up against the $670 (spot) area. That's a fairly key level where the market would like get back above," he said. Hunter added there was a downside risk for gold to test the $663 and $665 area because gold's early gain was "an artificial bounce."
Spot gold was quoted at $667.60/9.10 versus $668.20/9.70 late Monday. The London morning gold fix was set lower at $667.00. James Moore, analyst at TheBullionDesk.com, said in a note that gold's movement would continue to be mixed for the near future as the market remained pressured by funds' long liquidation but underpinned by bargain hunting by physical buyers and investors. Commodities research firm and consultant CPM Group forecast the price of silver to outperform that of gold in 2007 because of what it termed the bullish dynamics of silver.
COMEX July silver was down 2.50 cents at $13.210 an ounce, trading from $13.080 to $13.275. Spot silver was quoted at $13.11/3.16 which was off from $13.11/3.16 on Monday in New York. In London, silver was fixed at $13.02.
Refiner Johnson Matthey Plc said platinum might set a new record of $1,400 an ounce over the next six months, buoyed by interest in exchange-traded funds, limited stocks and fund buying. July platinum gained 80 cents to $1,330.10 an ounce. Spot platinum was quoted at $1,320.00/1,325.00. June palladium fell $2.70 to $358.00 an ounce. Spot palladium fetched $358.00/362.00.
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