gold on comex

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    NEW YORK, Dec 30 (Reuters) - COMEX gold eased in mixed year-end trade
    early Monday, but speculators still viewed the yellow metal as the safest
    bet with the United States locked in nerve-racking standoffs with Iraq and
    North Korea.
    Trade was thin and two-way, with players getting their last chance to
    re-jig positions before an early close on Tuesday and the New Year holiday
    "There's been a lot of illiquidity that's driving the market back and
    forth," said a floor broker. "The upside's been the predominant winner
    because funds continue to add on to positions."
    Futures were orbiting the $350 an ounce level, an easy trade from the
    recent six-year high hit as gold was bought for portfolio insurance, in the
    belief that the Bush administration is bent on going to war to disarm
    February gold <0#GC:> at 0925 EST was off $1.60 at $348.10 an ounce,
    trading $350.80-$347.30. Friday's close at $349.70 was its highest in
    almost six years, as was the Dec 19 intraday peak at $355.70.
    "So many people believe that within three months there's going to be
    another major terrorist attack in New York," the broker said. "Once Bush
    bombs Iraq, as if that's a foregone conclusion, they're going to attack us
    -- so many are thinking that way."
    A diplomatic crisis over North Korea's nuclear program added to
    geopolitical jitters. The killing of three American medical aid workers in
    Yemen also helped fatten gold's risk premium.
    Oil prices are at two-year highs over $33 a barrel, enhancing gold's
    role as an inflation hedge, while the dollar plumbed three-year lows
    against the euro, making bullion more affordable to European investors.
    So gold is now up some 25 percent in 2002. It has has not been so
    overbought since 1996. Dealers said there is some risk of profit-taking
    sending prices down, but that may be balanced by interest in putting gold
    on the books for year end to offset stock market losses, dealers said.
    CFTC's Commitments of Traders data issued after the close Friday showed
    large speculators net long 57,105 (100-ounce) COMEX gold contracts as of
    Tuesday, up from 55,200 lots a week earlier.
    "Any selling that does occur appears to be only long liquidation and
    speculators and investors are holding historically massive long positions
    and, at least at this time, feel quite comfortable," wrote Leonard Kaplan,
    president of Prospector Asset Management in Monday's commentary.
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