May 5, 2005
Reuters
LONDON - Gold prices moved higher in Europe on Thursday, with sentiment underpinned by dollar weakness against the euro, dealers said.
News of an explosion in front of the British consulate in New York failed to bring out fresh safe-haven buying on its own, with dealers citing reaction only via currency moves.
Spot gold firmed to $430.00/430.80 per troy ounce by 1115 GMT from $428.85/429.60 late in New York on Wednesday.
"This seems to be a technically driven market. The longs are still very long, but while it looks heavy, one still can't deny its resilience," Peter Hillyard, head of European metal sales at ANZ bank, said.
"Whilst the price is above $429-1/2, it has possibilities to go higher," he said, adding that further resistance could be found around $434.
The euro's strength against the dollar came as traders unwound bets that the Federal Reserve could get more aggressive in raising U.S. interest rates this year -- a move that would tend to boost the dollar and tarnish the appeal of gold.
Numis Securities said in a research note that some analysts believed Tuesday's U.S. interest rate rise could be the last for a while.
"The Fed's 'measured pace' approach (to monetary policy) is being interpreted as offering potential for a delay to further rate rises as falling U.S. consumer spending takes effect," the note said.
A weaker U.S. currency makes dollar-priced gold cheaper for non-U.S. investors.
"Continuing demand for gold, falling South African mine supply now at its lowest level since the 1930s and continuing, though slower dehedging of forward gold sales by producers should cause prices to rise further," the Numis note added.
Gold market analysts surveyed by Reuters in January said they expected the market to post a fourth year of gains in 2005, with some expecting prices to push past last December's 16-1/2-year peak of $456.75 at some point.[ID:nL27543373]
Silver followed gold higher, with spot metal last at $7.02/7.05 from $6.97/7.00 late in New York on Wednesday.
Platinum rose slightly to $873.00/877.00 from $872.00/876.00 previously, while palladium stood at $193.00/197.00 from $192.00/195.00.
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