US gold futures ended $2 lower on Tuesday, ignoring a weak dollar, as falling energy prices prompted jittery investors to lock in profits as prices were within sight of the psychological $700 level. Most-active gold futures for June delivery on the Comex division of the New York Mercantile Exchange were down $2.00 at $692.50 an ounce traded in a tight $5 band from $690.20 to $695.50.
Joseph Gizzards at Saibu Commodities said that he was surprised that gold fell given that the dollar dropped against the euro. Gizzards, however, said that gold was able to stage a nice rally and came back in the previous session.
On Monday, the June contract reversed losses to settle up $4.60 at $694.50, boosted by dealer and fund buying. Guzzardi said that trading was quiet and prices seemed to be stuck in a range between $693 and $695.50.
He expected the contract to retest $695 in the short run. Comex estimated final exchange floor volume at only 7,753 lot and option turnover at 3,041. Turnover in the Chicago Board of Trade's electronically traded 100-oz gold contract was 24,354 lots as of 2:31 pm. One New York precious metals dealer said that spot gold prices had broken above resistance levels on Monday. "The market is still long. We are still anticipating $700," the dealer said.
On Monday, spot bullion surpassed the 2007 high of $689, which was set on February 26, before the tumultuous sell-off in the global financial markets. Spot gold was quoted at $686.70/687.20 an ounce, below a late quote of $690.90/1.40 in New York on Monday. London's afternoon gold fix was set at $688.00.
Two government reports showed that US core inflation dipped in March and groundbreaking for new homes rose slightly as the economy demonstrated anew an ability to keep growing without generating surging prices. The Labour Department said that monthly core prices, which exclude food and energy, were up only 0.1 percent after larger gains of 0.2 percent in February and 0.3 percent in January.
Gold is generally seen as a hedge against inflation. US crude futures settled down 51 cents at $63.10 a barrel on Tuesday. The dollar fell to a two-year low against the euro. The euro was trading up at $1.3568 after touching a two-year high of $1.3595, less than 1 cent below a record high of $1.3670 in December 2004. The pound sterling also broke above $2 for the first time in almost 15 years.
A lower dollar makes gold cheaper for investors holding other currencies. In other precious metals, Comex may silver finished down 6.00 cents at $14.020 an ounce, traded from $13.900 to $14.110. Spot silver was quoted at $13.91/3.94, compared with $14.03/4.06 late on Monday. Silver was fixed at $13.960 in London. In the platinum group metals news, Switzerland's Zurich Cantonal Bank said it planned to launch exchange-traded funds (ETFs) based on platinum, palladium and silver from the next month.
But the world's biggest platinum producer Angloplat said it will not supply physical metal to the fund because it would sharpen supply shortages. John Reade, an analyst at UBS, raised three-month spot price targets to $1,350 from $1,300 an ounce for platinum, and lifted palladium to $420 from $380 an ounce.
In a research note, Reade cited robust interest from hedge funds and private investors because of the new ETFs. Nymex July platinum fell $8.60 to end at $1,280.90 an ounce. Spot platinum was quoted at $1,264.00/68.00. June palladium retraced losses to close $1.35 higher at $380.35 an ounce. Spot palladium fetched $373.50/7.50.