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Monday, 17 February, 2003, 16:16 GMT
Gold falls as war tensions ease
gold bars
Investors tend to regard gold as a safe haven
The price of gold has fallen to its lowest level in almost seven weeks following signs that momentum towards a military conflict with Iraq may be slowing.

The gold market is saying that war is not a certainty

Paul Lee, director of precious metals at Dresdner Kleinwort Wasserstein
Gold, often seen as a safe-haven in times of international tension, fell as low as $342 an ounce on Monday, down from Friday's price of $350.50, before rising back to $347 by the day's end.

The US dollar, meanwhile, climbed against major currencies as war fears eased.

A weekend of massive anti-war demonstrations around the world and a divided international diplomatic community appears to have reduced tension.

"The case for war is getting weaker and weaker," said Teng Ngiek Lian, chief executive at Singapore's Target Asset Management.

Chief UN arms inspector Hans Blix was more conciliatory than usual last Friday in his report on weapons inspections in Iraq, leaving the UN Security Council divided over the need for war.

Gold slump

At 1600 GMT, after climbing to a session high of 1.0777 against the euro, the dollar was still almost one cent up, at 1.0734 euros.

"The gold market is saying that war is not a certainty," said Paul Lee, director of precious metals at Dresdner Kleinwort Wasserstein in Sydney.

Gold had seen a steady climb as tensions over a war in the Gulf made investors jittery.

Gold peaked at $388.50 earlier in February, its highest level in more than six years.

The financial markets in the US are closed on Monday, including trade of benchmark crude oil, to mark the Presidents' Day holiday.

See also:

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