Nov. 5, 2004
Rueters
NEW YORK, Nov 5 (Reuters) - Gold futures extended gains above $430 an ounce on Friday morning, shaking off an earlier slide, as the euro rebounded against the dollar despite a much stronger-than-expected U.S. jobs report for October.
By 10:23 a.m. EST (1523 GMT), December gold rose $1.20 to $432 an ounce at the New York Mercantile Exchange's COMEX division, in a range from $425.50 to $432.20
Thursday, the contract peaked at $434, which marked the highest price for an active futures month since July 1988.
Gold recouped losses on Friday after pulling back from Thursday's 16-year highs when a surprise 337,000 jump in October U.S. nonfarm payrolls lifted the dollar. Expectations had been for 169,000 new jobs.
But traders said sentiment on the euro was still bullish and there was renewed buying on the dip after the employment report, which along with firmer oil, propped up gold.
"The euro turned around and crude oil turned around in here, so between the crude and the euro/dollar there is some small buying from some trade funds," said a COMEX floor broker.
Dollar-denominated gold has an inverse correlation with the greenback, which has fallen to multiyear lows this year on worries over the U.S. current account and trade deficits. A softer dollar makes gold cheaper in foreign currencies.
Analysts were projecting gold higher in the long term, with the euro strong after U.S. President George W. Bush's re-election this week.
"The mix of another four years of Bush economic and political policies, geopolitical instabilities, particularly in the Middle East, and the threat of terrorism all suggest higher gold prices, with $440 my target for the year," said James Moore at thebulliondesk.com.
Brokers view near-term resistance in December gold futures at $433.60 and then at $436, with support near $418.
The market now awaits a meeting on Nov. 10 of the U.S. Federal Reserve Open Market Committee, which is expected to raise interest rates. Dealers said the jobs data made it likely the Fed would increase rates.
Safe-haven gold could come under pressure if rates go up because that would bolster the dollar and make dollar-priced gold more expensive for holders of other currencies.
Spot gold hit $430.55/1.30 an ounce, versus $428.95/9.70 late Thursday in New York. The afternoon fix in London was $431.
The euro rose to $1.2893 from $1.2880 late Thursday. U.S. crude climbed 48 cents to $49.30 a barrel.
Silver prices advanced but futures were still capped below technical resistance at $7.53 an ounce, the Oct. 25 high.
December silver rose 5.2 cents to $7.435 an ounce, moving from $7.28 to $7.47. Spot hit $7.40/43, up from $7.39/42 previously. The London fix was $7.36.
January platinum fell $2.60 to $846 an ounce, retreating further from the Sept. 28 high of $878. Spot platinum traded to $844.00/849.00.
December palladium rose 25 cents to $215 an ounce. Spot palladium was at $212.00/216.00.
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