Gold bounces on dollar drop

Frank Tang and Atul Prakash
Reuters
Tuesday, March 25, 2008

Gold finished nearly 2 percent higher on Tuesday, rebounding from its recent sharp decline as funds poured into the market after the dollar slumped broadly on weak economic data.

Investors were cautious after their confidence was shaken by a recent sell-off in commodities, with gold falling more than 10 percent last week since spiking to a record high of $1,030.80 an ounce on March 17.

Platinum has fallen more than 20 percent from this month's record high of $2,290 before recovering, silver has slipped 20 percent from a 27-year high, and palladium has plummeted nearly 30 percent before moving higher.

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Gold touched a low of $911.50 an ounce on Tuesday before hitting a high of $936.50. It was at $934.60/935.40 by New York's last quote at 2:15 p.m. EDT, against $920.90/921.70 in New York late on Monday.

"We see some consolidation in the market between $910 and $950, but the potential clearly remains on the upside," said Frederic Panizzutti, analyst at MKS Finance.

"Any continuation in the dollar's downside trend would enable gold to move towards the upper side of the range and possibly break it, but after the massive price correction the market would be cautious."

The dollar retreated broadly, posting its steepest loss against the euro in two weeks and hurt by concerns about the health of the U.S. economy and the global financial sector.

A private sector report showed U.S. consumer confidence in March fell to a five-year low, while expectations for the future dropped to their lowest level in 34 years. U.S. home prices for January fell in 16 of the 20 regions measured.

Full article here.

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