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METALS STOCKS
Gold pulls back as Iran concerns ease

E-mail | Print | | Disable live quotes By Ciara Linnane, MarketWatch
Last Update: 7:56 AM ET May 8, 2006


NEW YORK (MarketWatch) - After logging a 25-year peak overnight, gold futures fell early Monday as concerns about Iran's nuclear standoff with the West were eased by what seems like an attempt at compromise by President Mahmoud Ahmadinejad.
Gold for June delivery was last trading down $3 at $681.30 an ounce in electronic trade, after earlier rising to as high $688.20 as the dollar fell sharply against the yen and other major currencies.
Gold fell along with crude prices, after an Iranian government spokesman told reporters that Ahmadinejad has written a letter to U.S. President Bush proposing "new solutions" for "getting out of international problems."
That would mark the first letter from an Iranian leader to a U.S. president in 27 years.
The spokesman didn't specifically refer to the key issue in their dispute, Iran's nuclear- research program, which the U.S. and other Western countries are seeking to stop, fearing Tehran is attempting to create nuclear weapons, newswires reported.
"Gold seems to be taking a breather from its rapid ascent to $700 based on the news of a letter being sent to President Bush form Iran," said trader Kevin Kerr.
However, "the bottom line is nothing has changed, and as the situation escalates we are likely to see a new flurry of buying and a breach of $700 gold in short order.
"We may run into key resistance ahead of that number as we typically do since $700 is a key stop level for some investors and it will take a significant push to get through the $690- $692 level. [But] it seems destined to happen unless we get a sudden capitulation from Iran, which seems highly unlikely."
Silver also pulled back, last trading down 27 cents at $13.62 an ounce. Platinum was up $3.30 at $1,192.40 an ounce and palladium rose $1.45 to $380.20 an ounce.
Copper fell 7.3 cents to $3.421 a pound.
Investec Securities said the copper market now believes that China has closed out the 130,000-ton short position allegedly run up by trader Liu Qibing late last year. Qibing, who worked for China's State Reserve Bureau, disappeared after building the position and was later arrested in Beijing.
"Most of the bureau's short positions were closed in March and recent weeks. There are few positions left and they are not sufficient to have a big impact on the market," Investec quoted Yang Yinghui, head of metals trading at Cofco Futures, as saying.
On the supply side, copper inventories were down 520 short tons at 15,202 short tons as of late Friday, according to data from the New York Mercantile Exchange.
Gold stocks were up 314,289 troy ounces at 7.65 million, while silver supplies were unchanged at 123.6 million troy ounces.