gold articleUPDATE 5-Gold slips below $700 on dollar, profit-taking
Wed May 17, 2006 2:43 PM ET
(Updates with analyst comments, prices)
By Atul Prakash
LONDON, May 17 (Reuters) - Gold rode the roller coaster on Wednesday, moving in a wide $30 range on jitters over the dollar, while platinum touched a new all-time high before settling a bit lower.
Gold jumped nearly 4 percent at one stage on a drop in the dollar, but a rebound by the U.S. currency prompted many bullion investors to take profits, erasing most of the metal's early advance.
James Moore, analyst with TheBullionDesk, said gold's long-term bull market was intact, but he saw risk of a further short-term correction as heavily leveraged funds want to take some profits off the table at lofty prices.
"I remain of the view that gold will be treading water around $685-715 for the next week or so before resuming its upward march toward its all-time high of $850," Moore said in an afternoon report.
Spot gold got as high as $716.00 an ounce before easing to $690.90/691.70 late in New York, against $689.90/0.90 late on Tuesday, when it had risen more than $7. It had fallen to $685.80 during Asian trade.
At its 26-year peak of $730 on Friday, gold was up 41 percent from the start of this year and 75 percent from a year earlier. But prices fell more than 7 percent the next day when the metal tumbled in a broad sell-off.
A trader in London said gold should start to rise again, possibly to new highs, but with hiccups along the way.
"I think $722 and $730 are probably going to provide resistance on the way up and volatility is going to be a key feature in the short term."
Dealers said market volatility would persist and movements in the currency and energy markets would offer fresh leads.
A strong U.S. currency makes dollar-priced gold costlier for holders of other currencies and lowers demand.
"We still see gold and silver prices higher on a one and three month view and recommend buying dips," said John Reade, analyst at UBS Investment Bank.
Some analysts said gold prices might drop further before moving back toward this month's peaks.
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