Gold inches higher as dollar weakens, US holiday slows market

London (Platts)--5Sep2005

Bullion inched higher in Europe early Monday to above the $445/oz level
as the dollar weakened against major currencies amid thin market conditions as
the US market was closed for the Labor Day holiday, commented a European gold
trader. "The problem is the weaker dollar...there was Asian buying overnight
and when London came in it reached $446/oz but has drifted down since," said
the trader.

     The euro strengthened against the dollar to $1.2559 at 0830 GMT--just shy
from its high Friday of $1.2590--and was up from $1.2537 at 1600 GMT on
Friday. The greenback also softened against the Japanese yen to Yen 108.92
from Yen 109.75.

     Trading was expected to be slow going today: "With the US out I don't
think there will be much happening...volatility will be slow," forecast the
trader. Spot gold was bid at $445.35-445.85/oz at 0822 GMT, up $2.55 against
last spot prices in New York Friday of $442.80/oz, $1.75 higher than London's
afternoon fix on Friday of $443.60/oz.

     Selling interest was seen at around the $447/oz mark, said the trader who
added that support was viewed at $442/oz. "I'm expecting physical interest to
kick in soon, this week or next but with the higher gold prices it will be
interesting to see what happens," he said. Physical gold buyers tend to await
a period of stability before purchasing, he added.

     Gold could push higher over the course of the week if US data released
puts further pressure on the dollar, he said. Employment data is due on
Tuesday, the US Fed's beige book Wednesday, weekly oil data Thursday and
import prices, CFTC data Friday.

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