Gold Hovers Around 2-Week High

Precious metal nears $413 an ounce as dollar continues to erode versus euro

February 12, 2004

LONDON (Reuters) - Gold continued its bullish run Thursday as the weaker dollar pushed prices of the precious metal to two-week highs.

Spot gold was at $412 a troy ounce in early trading after briefly touching a two-week high of $413.00 earlier in the session.

The euro was at $1.2823, steady after Wednesday's gains. Gold is often seen as an alternative investment to dollar-denominated securities.

Analysts see a current range for gold of $408-$413.

Currency moves after Wednesday's speech by Federal Reserve Chairman Alan Greenspan, who showed little concern for the dollar's fall, saw the euro back above $1.28 and took the gold price over $410 an ounce.

Gold's fortunes have been firmly tied to currency markets, where the dollar' s decline to a lifetime low against the euro in January drove bullion to a 15-year peak of $430.50.

"Gold remains steady with the weaker dollar," said ANZ's Peter Hillyard. "I don't think there is any question it will hold its gains."

Market fundamentals were also strong.

"Underlying all the metals is a sense that the market wants to go higher and it just looks for cues -- and excuses -- to do that," Hillyard said.

Traders at Rothschild were awaiting more news from the United States this week.
"The U.S. trade balance figures on Friday will be closely watched and any further weakness in the dollar could trigger a move to $6.75 and $415 in silver and gold respectively," they said in an overnight report.  

http://money.cnn.com/2004/02/12/markets/gold.reut/index.htm