Asian gold shakes off BOJ jitters, firms in afternoon Updated Fri 6/21/2002 01:00 EST
HONG KONG, June 21 (Reuters) - Spot gold advanced in light trade in Asia on Friday, as fears of intervention by the Bank of Japan to halt the dollar's week-long slump against the yen receded. Spot gold <XAU=> was trading at US$323.85/4.35 an ounce at 0530 GMT, higher than the Hong Kong open at US$323.40/3.90 and New York's last quoted US$323.10/3.60. Trading activity in gold appeared to be brisk in the early hours when there was concern about the Bank of Japan's intervention in the currency market, then declined when the BOJ left without taking any action, dealers said. "Traders may be cautious of this steady, step-by-step rise in the gold price," said Jimmy Pan, chief dealer at Hing Fung Goldsmith and Refinery. "If you are holding a short position, you won't cut losses in this market," Pan said, adding the latest traders' commitment reports bear this out: Gold's advance was due to short covering and not new buying interest which remained weak. The physical market in Asia for gold for jewellery and investment was "absolutely dead," said one trader with a market maker in Hong Kong. To view gold as a long-term investment, investors need to be more pessimistic about the U.S. economy, believe in a weak dollar trend, and expect significant further downside for the Dow Jones Industrial Average <.DJI>. The dollar continued to weaken against the yen on Friday, technically boosting the dollar price of gold and setting up more arbitrage opportunities between spot gold and yen-based gold futures. On the Tokyo Commodity Exchange (TOCOM), TOCOM's benchmark April 2003 <0#JAU:> added four yen to 1,283 yen on moderate turnover of 33,578 contracts. The yen <JPY=> strengthened to 123.34 yen against the dollar. "Eventually we are going to break 123 yen. These are real fund flows (into the yen)," said Anson Tse, dealer at NM Rothschild in Hong Kong. Hong Kong tael gold <TAEL=>, which is traded on the Chinese Gold and Silver Exchange, ended the morning at HK$3,011, higher than the open at HK$3,003. Kilogold <HKGH>, a spot contract traded on the Hong Kong exchange, ended the morning unchanged from the open at HK$81.05 a gramme. Spot silver <XAG=> was also unchanged at US$4.88/4.90 an ounce.
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