Gold set to weaken further, after rally fizzles
5/22/2001 6:28:00 AM
LONDON, May 22 (Reuters) - Gold <XAU=> traded gently lower in Europe on Tuesday morning and is set to weaken beneath $280 a troy ounce after a downdraft in New York and Asia overnight ended a rally that had taken bullion up to near $300.
Gold fixed in London at $282.75 on Tuesday morning, sharply lower than Monday afternoon's $291.25 and slightly easier than the opening spot of $283.15/283.90. It closed in New York at $285.15/286.15.
The fresh longs created from Friday and Monday's sharp short-covering rally could weigh on prices in the days ahead as could producer selling, with miners striving to lock in the more favourable prices for future sales.
Analysts say the $280 area is vulnerable, with some analysts seeing enthusiasm wane as players take stock of a move which was largely driven by speculative money.
"There were reasons to cover shorts with U.S. rates low ...but that is not necessary a case for buying, just for covering," said John Reade, precious metals analyst at UBS Warburg.
But Lawrence Eagles, an analyst at GNI Research, said the improving prospects for U.S. growth that helped form the backdrop for the rally would lend support to bullion once it slid back beneath $280 to $275.
"Gold is behaving more like a base metal, rallying because global growth prospects are improving," Eagles said.
"I think the spike was clearly short-covering but any dip below $280 to $275 would be seen as a buying opportunity. We're looking at a more positive range for bullion."
One analyst also said consumer interest was picking up.
Silver <XAG=> slipped slightly in line with gold, with spot trading at $4.51/53 after closing at $4.54/56 in New York.
PLATINUM EASING AS RUSSIA CHANGES EXPORT RULES
Platinum <XPT=> edged lower to fix at $614.00 a troy ounce, down from Monday's fixes at $616.00, but spot lingered around $613.00/$620.00 as the market shrugged aside planned changes in Russian export rules.
President Vladimir Putin is likely to sign a decree soon allowing Russian platinum group metals holders to obtain multi-year export permits instead of yearly ones, the head of Gokhran said on Tuesday.
Russia's metals giant Norilsk Nickel (NKEL) was likely to get a multi-year platinum export quota to go with the palladium one it already holds, Valery Rudakov, the head of the state precious metals and gems repository told Reuters.
He also said the decree referred to both raw materials and finished goods,l which had been unclear from conflicting statements on Monday.
Palladium <XPD=> fixed at $655 a troy ounce, unchanged from Monday's and Friday afternoon's fixes. Spot was trading quietly at 650/665. |
