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Gold gains ahead of Iraq war
HONG KONG, China (Reuters) -- Safe-haven gold attracted fresh buying on Wednesday ahead of an expected U.S.-led assault on Iraq, traders said. Gold and other precious metal prices were expected to be skittish but would stick to recent ranges ahead of a U.S. deadline to Iraq of 0100 GMT on Thursday, dealers said. At 0742 GMT, spot gold was quoted at $339.00/340.00 an ounce, up from $337.50/338.25 an ounce at the New York close on Tuesday but off last month's 6-1/2 year high of $388.50. The metal was expected to remain at $338-340 ahead of the deadline given by U.S. President George W. Bush to Iraqi President Saddam Hussein and his sons to leave the country. "If there is military action, we could see gold spike about $5.00, but then we will see a big drop," said Richard Lim, director of UBS Warburg in Singapore. The first line of support lay in the $328-332 range, Lim added. That forecast was based on the belief that any U.S.-led military action against Iraq would be short with minimal casualties, Lim said. "That would be good for everybody," he added. Bullion's price was dictated largely by the trend in the U.S. dollar and on Wednesday the dollar was trading weaker against the Japanese yen and the euro. On Monday evening, Bush gave Saddam Hussein and his sons 48 hours to leave Iraq or face attack by 280,000 troops poised for war in the Gulf region. Iraq rejected the ultimatum. "I don't think that it is going to do too much in the next 24 hours," said a dealer with a large international bank in Sydney. "Volume has been very, very light today and it's been stuck around the $340 barrier." Bullion has a history of price volatility in times of war. Gold gained $45 to $415 when Iraqi forces invaded Kuwait in August, 1990, then fell by $40 to $366 when allied forces began action to evict Iraq from the Gulf emirate in January, 1991. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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