COMEX gold eased early Tuesday
COMEX gold eased early Tuesday but found a floor above the previous session's seven-month low as the dollar backpedaled from its overnight 15-day high against the euro, Reuters reports.
Gold's link with the euro remains fast, traders said. Barring any surprises from the Middle East and the U.S. war on terror that would rekindle safe-haven buying, they see gold's fortunes tied to the dollar.
Benchmark June gold was off $1.10 at $377.70 an ounce, trading from $380.20 to $376.50. On Monday it bottomed at $371.30, its cheapest since Oct. 17, 2003.
Spot gold fetched $376.95/7.65, off from the close at $378.40/9.15. London's morning fix was at $378.00.
"During London time when the euro fell gold followed. Now I think the market has mixed feelings about gold," said a New York bullion trader. "They like the way it held that $372 area yesterday and are just looking for a little bit of direction."
The euro fell to $1.1790 overnight and was quoted in the morning at $1.1822/25, just down from the close at $1.1825/29.
Investors have streamed back into the dollar to reap the higher yields resulting from bond market speculation that the Federal Reserve is about to increase interest rates from 45-year lows to prevent the economy from overheating.
The case for holding gold and other dollar-priced commodities weakened in the rising U.S. interest rate environment, because of the increased opportunity cost of holding hard assets which bear no yield.