New York gold futures rallied to a one-month high on Friday, shaking off a morning fall with traders heartened by the metal's unusual imperviousness to a rallying dollar, market sources said. A rebound in the greenback this week pushed the euro to a nine month low on Friday. But the correlation expected between gold and the European unit was little seen.
"It held up very well," said David Rinehimer, head of commodity research at Citigroup Global Markets. "It's starting to show some delinking it seems a little bit right now from the dollar and that is encouraging some buying at these price levels."
Gold for August delivery settled $3.20 higher at $429.30 an ounce on the COMEX division of the New York Mercantile Exchange, reaching $430.50, its highest price since May 12, from morning low of $424.10.
Initially gold struggled as investors sought dollars after the Commerce Department said the April US international trade deficit widened to $56.96 billion from a downwardly revised $53.56 billion in March.
That was encouraging to traders and economists who had predicted to that the deficit would expand to $58 billion.
On Thursday, gold fell as the dollar climbed after Greenspan said the US economy is on a firm footing and that interest rates can be continue to go up at a measured pace.
Rising US deposit rates help the dollar and weigh on gold, which carries almost no yield.
Gold bottomed at an eight month low on May 31 at $415.80.
"We should be down a lot more than where we are now. That was a good trade number but I think everyone sold this market yesterday and they got run in up to $427 (per ounce) and now nobody wants to sell it," said one.
Estimated final COMEX gold volume was 63,000 contracts, compared to Thursday's official 39,160.
Now that resistance $426 and $428 has been cleared, with a break, chartists are targeting $435. A close below $423 would signal a revisit of support $417, said one.
In other news, the Group of Eight finance ministers are considering using money raised by International Monetary Fund gold sales in the 1990's to write off poor countries debt, a G7 official told Reuters on Friday.
"I don't think at this point anyway the market is either focused on or that concerned about it," Rinehimer said. "Outright sales of IMF gold seems like unlikely event."
Spot gold closed at $427.00/7.70 an ounce, against $423/3.70 late Thursday. London's afternoon fix was $422.55.
Silver prices followed gold down and up. July silver closed 1.8 cent higher at $7.288 an ounce, trading between $7.155 and $7.31.
Spot silver fetched $7.24/27, near Thursday's close at $7.24/26. It fixed at $7.24.
Silver volume was estimated at 19,000 lots, below the 48,518 lots from the previous session.
At NYMEX, July platinum fell $1 to $871.60 an ounce. Spot last was at $867/872.
September palladium eased 50 cents to $186.50 an ounce. Spot fetched $183/187.