US gold futures settled lower but above a fresh near-four-month nadir on Tuesday on the back of an ailing euro, while silver prices surged to their highest since mid-March on late fund buying, dealers said. Some traders were buying silver and ditching gold on a ratio play between the two markets, even after most metals fell with the euro's drop to a seven-month low against the dollar after France's "No" vote on the EU constitution this weekend.
"The fund buying was tremendous from the get-go, even when it was down this morning. Silver is not following the other metals," said Scott Meyers, an analyst at Pioneer Futures.
July delivery silver on the New York Mercantile Exchange jumped 14.2 cents to $7.452 an ounce - the strongest settlement for futures since March 16 - after trading up from a session low at $7.14.
The ratio of gold's price to silver's fell to just above 56:1 from around 59:1 about two weeks ago, which traders took as a bullish signal for the price of the grey metal.
"It was all fund buying; I think it was fresh long positions," said a COMEX floor trader. "Stops (stop-loss buy orders) were executed above $7.32 and it continued to rally."
Additionally, talk about tight bullion supply and fresh investor interest from a possible silver exchange-traded fund have supported values since last week, said Pioneer's Meyers.
"The chart pattern looks fantastic," added Meyers. "We are looking for resistance at $7.70 and then at $7.74, and after that there is nothing to stop it from going to $8."
Spot silver last was priced at $7.42/7.45 from $7.27/30 previously. Tuesday's London fix was at $7.13.
Meanwhile in gold, August futures fell $3.50 to settled at $418.90 an ounce, after dealing from $422.90 to $415.80, which was the lowest since early February.
The market remained positioned above major support at the $414-410 area, however.
Gold retreated after the euro fell following France's rejection of the EU constitution, which raised concerns about the prospects for economic reform in Europe.
Analysts say the euro zone needs deep reforms because of its anemic growth and low confidence, but the French "No" underscored voters' distrust of a reform drive that could limit social protection.
Gold usually moves in opposition to the US currency as many investors use the metal as a dollar alternative.
"The no vote...has added a leg down to the gold trend but this market remains oversold and we'd look for a rebound in the near-term," said Tim Evans, senior commodity analyst at IFR Markets.
The euro last was at $1.2299 at midafternoon.
Spot gold was last at $416.50/417.20 an ounce, versus Friday's late quote in New York at $419.80/420.30. Tuesday's London afternoon fix was $414.45.
Looking to economic data, the US Consumer Confidence Index for May rose to 102.2 from a revised 97.5 in April. Economists had expected a reading at 96.5 for May.
The National Association of Purchasing Management-Chicago business barometer fell to 54.1 from 65.6 in April, showing US Midwest business activity rose in May for a 25th straight month but at a much slower rate than expected.
Economists had forecast the index at 62.0. A reading above 50 indicates expansion in the sector.
CFTC Commitments of Traders' data issued Friday showed the net fund long position in COMEX gold futures rose to 39,509 contracts as of May 24 from 55,944 lots a week earlier.
Evans put support in COMEX August gold at $416.80 and $400 and resistance at $422.90 and $425.70.
In NYMEX metals, July platinum eased $3.40 to $861.30 an ounce. Spot platinum traded to $859/864.
September palladium fell $1.90 to $184.75 an ounce. Spot reached $182/185.