Commodities - Gold ends nervously higher, oil lower

Read Reuters, 03.28.03, 4:55 PM ET NEW YORK, (Reuters) - Gold prices closed higher on Friday amid uncertainty about how well the war in Iraq was going and after the brief closing of a New York City bridge fanned ever-present jitters about terrorism. Uncertainty about Iraq also kept oil traders nervous but oil ended the day lower on a round of profit-taking after the Organization of Petroleum Exporting Countries indicated there was more than enough oil to cover any shortfalls from Iraq. At the COMEX, gold found support on growing sentiment that the week-old conflict in Iraq will drag on longer than U.S. war planners had expected. New York financial markets also remain jumpy about the threat of reprisal attacks against Americans. The dollar fell to its lowest level against the euro since the start of the war after police closed the Williamsburg Bridge linking Manhattan with Brooklyn for more than two hours on Friday morning, arresting three men. Police later said the men had climbed it in a drunken prank and were not terrorists. But the euro stretched its rally to $1.0801, its highest since March 17, making dollar-denominated gold more affordable to European investors. COMEX April gold closed up $3.10 at $331.50 an ounce. Analyst David Meger at Alaron Trading said the main factors in gold's pop were the dollar "and continued talk that maybe things aren't going quite as well as they planned in Iraq." A soft stock market also drove investors toward gold and other safe havens like the Swiss franc and U.S. Treasuries. The Dow Jones industrial average closed 55 points lower at 8,145. Gold bullion closed at $331.60/2.20, up from $328.40/9.00 at Thursday's New York close. London dealers earlier fixed the afternoon spot reference price at $330.75 an ounce. At the New York Mercantile Exchange, June palladium fell $9.65 to $188.00, setting a new contract low -- and 5-year low -- at $178. Automakers who use palladium to make pollution control devices did only mild bargain-hunting this week. NYMEX oil prices, meanwhile, ended a two-day rally and closed lower as OPEC assurances of ample crude supplies offset worries about production halts in both Iraq and Nigeria. Crude oil for May delivery closed 21 cents lower at $30.16 a barrel after trading between $29.85 to $30.85. The overnight high of $31.05 in screen trading marked a 14-percent rise since Monday and was the highest price since the war began in Iraq. In London, May Brent crude fell 47 cents at $26.35. U.S. Deputy Defense Secretary Paul Wolfowitz said on Friday the U.S. offensive in Iraq was going as planned. But the United States also announced it was sending another 120,000 troops for the fight to depose Iraqi President Saddam Hussein. The conflict has erased Iraq's 1.7 million barrels per day of crude oil exports at a time when 800,000 barrels a day of Nigerian output was also shut down by ethnic clashes there. "The assumption to date has been that Iraq's export disruption would end by the start of the third quarter, which coincides with a significant global increase in the demand for OPEC oil," said oil analyst Michael Rothman of Merrill Lynch. "If Iraq's production outage extends beyond the second quarter period, OPEC would not be able to meet market requirements," Rothman said. However, OPEC Secretary-General Alvaro Silva said in Vienna that there was more than sufficient oil supply in world markets and in fact the cartel was on alert for signs of a glut. "Even with the cessation of Iraqi exports and the temporary oil output reduction in Nigeria, there is still plenty of oil on the market," Silva told reporters. Led by a jump from Saudi Arabia, OPEC output rose by 430,000 barrels a day in March to 28.36 million bpd, Geneva-based energy consultancy Petrologistics said on Friday. Extra oil was added by Kuwait, the United Arab Emirates and Venezuela, where the state oil company restored a large amount of production after a two-month strike. NYMEX May gasoline closed 1.41 cents lower at 94.35 cents a gallon and May heating oil fell 2.03 cents at 75.70 cents. At the Chicago Board of Trade, wheat closed lower as speculators cashed in some profits ahead of U.S. Agriculture Department initial estimates for U.S. plantings due on Monday. Wheat for May delivery closed 4-1/4 cents lower at $2.79-1/4 per bushel. May soybeans closed 1/4 cent lower at $5.80 a bushel and May corn fell one cent at $2.27-3/4. Traders said they expected USDA to predict record corn plantings of about 80.5 million acres, up from 79.1 million last year, with soybean acreage falling to 72.4 million acres from 73.8 last year. Acreage for all forms of wheat was expected to rise to 62.5 million from 60.4 million a year ago.