Thursday June 26 11:05 AM EDT
London gold edges lower after quiet option expiry
LONDON, June 26 (Reuter) - Precious metals prices dipped on Thursday afternoon when mild selling came in after a featureless over the counter (OTC) option
expiry, dealers said.
``There was some fund selling on the exchange but neither of the major strike prices was seriously bothered,'' a dealer said.
Gold fixed at $336.95 per ounce against $337.90 this morning and $338.45 on Wednesday afternoon.
At the fixing the Comex August contract was down $0.50 at $338.50.
Mweanwhile the spot market briefly wrestled with support around $336.75-$337.25 before picking up.
This was the area through which gold would have to have fallen ahead of the options expiry to spark interest in the $335.00 strike price, dealers said.
In the event, the price remained between the $340 and $335 strikes leaving players with little need to take position.
Dealers said there were few incentives to invest in gold and lift it away from current low prices while the threat of central bank sales loomed over the market.
``If we were to see some (mine) shafts being closed down in South Africa then that could change things,'' a dealer said.
However a less hopeful view came from SBC Warburg.
In a report, in which it downgraded its gold price forecasts through to 1999, its researchers estimated only about 32 tonnes of gold production would be lost
through to the end of the century if the 1998 and 1999 price averaged $335.00.
Producers were more likely to step up forward selling to protect profit margins. An net additional 753 tonnes of metal would be delivered to the market by end
1999 through hedging, SBC Warburg estimated.
Silver slipped with gold and came up with the yellow metal as well. By 1430 GMT when gold recovered to nearer $338.00, silver was $4.75/$4.77, down three
cents but four above the low.
Silver has failed on the upside three times in the past few days but was still seen to be the better bet than gold.
``I would be quite interested in selling gold and buying silver as the fundamental weakness is in gold,'' a dealer said.
Platinum was easier after the gold fix at $416.00/$421.00 down $2.50 but apparently consolidating at the level from which its spike to nearly $500.00 started in
early June.
Palladium however was only $0.50 off at $196.00/$201.00 with both markets showing less of the tightness which almost crippled trading a couple of weeks ago. |
