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Gold jumps higher dollar falls { June 5 2003 } Original Source Link: (May no longer be active)
http://reuters.com/financeArticle.jhtml?storyID=2884183&newsType=usGoldRpt&menuType=marketshttp://reuters.com/financeArticle.jhtml?storyID=2884183&newsType=usGoldRpt&menuType=markets
UPDATE 3-Gold jumps higher as dollar resumes fall
Thu June 5, 2003 11:18 AM ET
(updates to afternoon)
By Clare Black
LONDON, June 5 (Reuters) - Gold rose sharply in Europe on Thursday, reversing a two-day losing streak as the dollar tumbled against the euro despite a 50 basis point interest cut by the European Central Bank.
Expectations of such an aggressive cut had hurt the euro in recent days, which in turn put pressure on gold as it became relatively more expensive for European-based investors.
But with interest rates still 75 basis points higher in Europe, and weak U.S. jobless data, the euro bounced up to $1.1859, up more than 1.5 percent from previous New York trading. By 1451 GMT, the euro fetched $1,830/31.
"Gold is still trading very closely in line with the dollar/euro rate and since the ECB announcement, which I think was more than expected, we've seen the euro gaining and not surprisingly, gold has done the same," said Barclays Capital analyst Kevin Norrish.
Traders were not overly impressed by the gains, which were mainly due to technically based fund buying, they said.
"It remains within recent ranges. There is no fresh impetus apart from the technical funds," Hans Witting, a director with NM Rothschild said, adding that volume was still very thin.
Spot gold was trading at $366.80/367.30 an ounce at 1449 GMT, up just from $362.60/363.10 last quoted in New York late on Wednesday, but off its session high at $368.75.
Gold's future direction will remain largely dependent on dollar/euro moves, analysts said, although overall the market was seen holding within its three-week range between $356.50 and $374.00 an ounce.
The precious metal hit its highest price in more than six years at $388.50 in February, and then tumbled to around $318 in April, before its latest comeback.
Deutsche Bank said on Thursday it had increased its forecasts for average gold prices for the next three years due to the end of a prolonged bull market in the dollar, associated euro strength and their combined effect on investment demand.
It upped its forecast for the average price of gold in 2003 by five percent to $357 an ounce, with prices seen gaining progressively through the year, moving from an estimated $350 in the second quarter to $360 and $364 in the third and fourth quarters.
In other precious metals, silver ignored the bounce in gold and languished near its lowest level in seven weeks. Spot was indicated unchanged at 4.49/4.51 an ounce, having traded as low as $4.45 earlier.
Spot platinum dipped down to $664.00/669.00 an ounce from $665.00/670.00 last quoted in New York, while palladium fell to $183.00/188.00 from $185.50/191.50 at the New York close.
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