LONDON, Oct 15 - Gold faltered in Europe on Wednesday in line with a softer euro against the dollar and as investors turned their attention towards key U.S. data for further indications about the pace of economic recovery. The dollar steadied against the euro and yen after a rally on Tuesday had collapsed amid U.S. current account concerns and comments from President George W. Bush. Japan's Yomiuri Shimbun newspaper reported that Bush warned against Japanese market intervention to weaken the yen. Bush restated his administration's line that the United States wanted a strong dollar policy but said markets should determine currency rates and that he would use his trip to Asia to press China and Japan to stop trying to weaken their currencies. A weaker dollar makes dollar-priced gold cheaper for holders of other currencies. Dealers said gold had reached a pivotal phase, with the market needing to decisively hurdle $379.00 an ounce to resume upside momentum. "This $370.00-375.00 range with a bit of wriggle room at the extremes remains intact -- the dollar has resumed its downward drift but the 10-and 40-day gold moving averages crossed on the downside on Tuesday, which introduces a note of caution into the market," one trader said.
"I think it has got to get above $378.00-379.00 to get fresh buying in. Fundamentally it looks fine, but the chart pattern is worrying," he added. Spot gold was quoted at 374.85/375.55 by 1012 GMT, compared with $375.00/375.75 last quoted in New York late on Tuesday. London bullion dealers fixed the spot reference price on Wednesday morning at $374.50. The euro was trading at $1.1685/90 after touching a low of $1.1678 earlier.
U.S. DATA EYED
Wednesday also marks the start of a run of U.S. economic indicators this week, which will be studied for clues on the pace of U.S. economic recovery. Signs of healthy economic growth could affect gold as a safe haven, but at the same time the metal is also seen as a hedge against inflation. U.S. retail sales and the New York Federal Reserve's manufacturing survey, known as the Empire State survey, are due out at 1230 GMT. The Federal Reserve's Beige Book, an anecdotal narrative of business conditions, is scheduled for 1800 GMT. "(U.S. retail) sales have increased in each of the past four months, although the sharp drop in auto sales in September and soft weekly chain store data suggests this month could see sales drop," HSBC metals analyst Allan Williamson said. Further out, gold is seen surpassing recent seven-year highs at $393.30 to reach the psychologically significant $400 level due to a bearish stance on the dollar. Canadian gold consultant Martin Murenbeeld, of British Columbia-based M Murenbeeld & Associates Inc, told gold was most likely to close this year at around $385 and rise to finish at $415 in 2004. "Probably one of the key factors is that we continue to be quite negative on the U.S. dollar," he said earlier on Wednesday. In other precious metals, platinum fell back on profit-taking after spiking briefly to match the 23-year high scored last week at $733.00. Palladium shrank back below $200.00 to $195.00/200.00. Silver was slightly weaker at $4.90/4.92 from $4.91/4.93 late in New York on Tuesday.//