Moves in gold dampened by lack of market interest
LONDON, Nov 20 (Reuters) - Movements in European gold prices were again suppressed by an absence of interest, poor economic data and the prospect of a three-day week over on COMEX and NYMEX, traders said on Tuesday morning.
By 1110 spot gold was last at $273.90/274.40 an ounce, climbing quietly up from the New York close on Monday at $272.50/273.00 an ounce.
The metal clambered a modest 15 cents on Tuesday morning to reach a fix of $273.75 an ounce, compared with $273.60 on Monday afternoon.
``Gold has come back a little this morning. It got to the $272.00 level yesterday, which is support and a bit of buying came in. It's possible that some of it was producer buy backs,'' a trader said.
This could reflect prospects of a three-way multi billion dollar merger deal between U.S.-based Newmont Mining Corp (NYSE:NEM - news), Australia's Normany Mining Ltd (Australia:NDY.AX - news) and Canada's Franco-Nevada Mining Corp Ltd (Toronto:FN.TO - news).
A weaker euro has also done little to help gold's case, as the metal's traditional safe-haven role in times of crisis also appears to have had its day.
On Monday the euro headed lower, dragging gold with it as the Bundesbank said in its November monthly report that Germany sae almost no growth in the third quarter, marking the second straight quarter of stagnation.
However, the European currency received a welcome boost on Tuesday after China announced its central bank had increased the proportion of euros it holds in its foreign exchange reserves and would continue to do so.
The dollar was trading at 0.8822 against $0.8786 at the New York close and off its recent three month highs against the single currency.
However, despite a slightly stronger euro, traders remained sceptical of gold's ability to hold above $274.00 an ounce as the week progressed.
``Whether it can hold above $274.00 for the rest of the week does not look good. All it needs is bad economic data to push it back down and off we go again,'' a trader said.
Silver looked to be gaining little respite as it headed lower on Tuesday morning.
Any price rises in silver over the last week were largely thanks to announcements in producer cut-backs in copper, traders said.
But with the rally in base metals now over, silver is seen retreating to its lows.
``As silver is mostly an industrial metal with many of the same applications as copper, recently reinstated silver spec shorts were obviously nervous. Any weakness in copper may see silver back on its lows,'' UBS Warburg analyst John Reade said in a daily report.
Spot silver was at $4.09/4.11 an ounce, up from $4.07/4.09 at the last New York close.
Elsewhere, platinum returned to highs of around $440.00 an ounce seen at the beginning of last week, pulled higher by gains on TOCOM overnight A flicker of interest returned to the PGM market, with palladium also looking firmer in the near-term, traders said.
However, traders warned that any price rallies in either metal could be relatively short-lived, with many expecting to see some producer selling returning to the market sooner rather than later.
``We expect to see some selling very soon from one source or another. Prices are getting there now, so some selling is likely to return, which will see platinum drift back towards $420.00,'' one said.
Spot platinum was quoted higher at $438.00/443.00. up around $10 from $428.00/435.00 at the last New York close.
Spot palladium was also up at $333.00/343.00, against the closing level in New York of $330.00/340.00.
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