Gold Steady as Traders Still See Spurt to US$340/Oz (Update2)
(Closes prices.)
Sydney, Oct. 12 (Bloomberg) -- Gold was steady in Asian
trading as traders said the longer the price stays around current
levels the more likely it is to have another spurt higher.
Gold rose as much as 27 percent to a two-year intraday high
of US$340.50 an ounce Oct. 5 after 15 European central banks
eased concern about official sales when they announced Sept. 26
they'd limit sales and lending from their reserves.
``If there's more (sold short bets) to clear, then the
longer the gold price holds up above US$310, US$320, the more
likely there is to be another go at US$340,' Duncan Cruickshank,
associate director at Barclays Capital said.
Gold for immediate delivery was steady in Asian inter-bank
trading, falling 25 cents, or 0.08 percent, to US$317.75 an ounce
from late New York trading. It earlier rose as high as US$320 an
ounce.
The gloomy days for gold, which touched a 20-year low of
US$251.75 an ounce in August are over, Cruickshank said, thanks
to the limits set by the European central banks. The banks,
including the Bank of England, said they agreed to sell no more
than 2,000 metric tons during the next five years.
The pledge by the central banks, which control about half
the gold reserves in the world, sparked a rush by investors,
commodity traders and producers to buy gold and cover bets the
gold prices would drop.
``The rally is not over,' Commonwealth Bank Research
analysts Elizabeth Blackwell, David Thurtell and Jon Sutton said
in a three-page report ``Gold Update.'
``With less uncertainty hanging over the market regarding
central bank gold sales, improving fabrication demand and the
closure of some high-cost mines, gold should rally over the
coming year,' they said.
Gold Demand
Gold demand from investors, jewelers and manufacturers was a
record 686.4 metric tons in the three months ended June 30,
according to the latest ``Gold Demand Trends' compiled by the
producer funded World Gold Council.
Meantime, production of gold dropped in major producing
countries. In Australia, the world's third largest gold producer
after South Africa and the U.S., gold output fell to an
annualized 290 tons in the three months ended June 30, from a
peak 320 tons in the three months ended Dec. 31 as high-cost
mines such as Sons of Gwalia Ltd.'s Nevoria mine in Western
Australia state were shut.
Australian gold stocks are benefiting from the optimism
about gold prices.
The index of 14 of the country's biggest gold stocks,
compiled by the Australian Stock Exchange, today rose 9.70
points, or 0.9 percent, to 1078.50.
Leading the advance was Goldfields Ltd., which rose 5
cents, or 4 percent, to A$1.30.
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