Europe gold falls to lowest since Sept 11 attacks Updated
kitco.com
Thu 10/18/2001 12:21 EDT
LONDON, Oct 18 (Reuters) - Gold tumbled on Thursday in Europe, led lower by swift bout of long liquidation on the New York market by investors disappointed by gold's continued weakness, traders said. Gold closed the European session at $278.90/279.65, its lowest close since the September 11 attacks in the United States, after shedding more than $3 from Wednesday's New York close at $282.20/282.90. "It was because of New York," one London trader said, referring to the liquidation of long positions held by commodity funds after COMEX opened for trade. Many market players have been disappointed by gold's failure to sustain a rally towards $300 an ounce, which initially caused prices to drift this week. The firmer dollar also did gold no favours in today's session. A stronger dollar makes gold more expensive to Eurozone investors and therefore kept much buying interest at bay despite the lower prices, traders said. "We didnt' see too much physical offtake...what weighs at the moment is that industrial interest is very limited," one trader said. "The euro is not contributing to any strength in gold...it does nothing but add to the pressure on the market," one trader said. Gold fixed in the afternoon at 281.00 a troy ounce down from $282.20 in the morning and with this recent fall, further weakness seemed likely, analysts said. "The risk remains that we see a sell-off to $278-$276 before another attempt to base out, especially while prices remain udner $286 resistance," analysts at J.P. Morgan said. Traders said the anthrax scare in the United States that weighed on the equity markets had little effect on gold. The overall tone in the gold market remained cautious, with market players keeping an eye on the U.S-led military campaign in Afghanistan, traders said. "If or when the Afghan conflict enters a riskier phase involving ground troops, gold should become jumpier and more reactive to geo-political news," one said. "We have seen producer-selling on the rallies and this is likely to continue although straightforward sales carry a risk if prices continue to rally," he added. Analysts said a repeat of a pre-weekend rally where traders covered to avoid being caught surprise by events in the Afghan conflict appeared unlikely. "The chances of a rally into the weekend have been diminished by the professional short covering seen over the past twenty-four hours," John Reade, analyst at UBS Warburg said.. Silver traded quietly and tracked gold. It ended the day at $4.26/4.28, down from $4.35/4/37 at New York close. Spot platinum <XPT=> was last quoted at $430.00/437.00 compared with close in New York of $438.00/445.00 while palladium <XPD=> ended the session at $325.00/335.00, up from last New York close at $320.00/340.00. ((Adrian Dascalu, London newsroom, +44 (0) 20 7542 8421, fax +44 (0) 20 7542 8077, adrian.dascalu@reuters.com)) |
