Gold drifts to end weak, longs bail out
LONDON, Nov 16 (Reuters) - Gold bullion looked to be ending
a mostly quiet week in Europe on a weak note, with spot prices
just holding above $274.00, as speculative longs continued to
scale back positions, traders said on Friday.
The market is still to react the potentially bullish
three-way merger between Newmont Mining Corp. <NEM.N> of the
U.S, Normandy <NDY.AX> of Australia and Franco Nevada <FN.TO> of
Canada to create the world's largest gold mining company, which
has dominated market talk for much of the week, traders added.
"The thing with the Normandy stuff is that it has not been
bought yet and when the deal is done it will be a long time from
now," one said.
Barclays Capital metals analyst Kevin Norrish said in a
report: "The implications on the gold market of this week's
announcement by Newmont, Normandy and Franco-Nevada would be
longer term rather than immediately felt."
"The decision by Newmont to deal with the Normandy
hedge-book when the 'time is right' has removed the possibility
of a hedge book buyback in the immediate term should the deal
move forward," he added.
Spot gold <XAU=> was last quoted at $274.60/275.10 an ounce,
just down from the close in New York on Thursday at
$275.00/275.50 a troy ounce.
MILD RESPONSE TO POSSIBLE QUICK RESOLUTION OF WAR
Gold has so far shown only a mild response to rising hopes
of a speedy end to the war in Afghanistan, with a scattering of
light liquidation entering the market, but the overall effect on
the price was muted, traders said.
"There was some fund selling in London yesterday which has
seen the price drift over the last 24 hours, but there is a bit
of physical demand around which is cushioning the move lower,"
one said.
Gold also appeared to be taking advantage of a choppy dollar
following the release of figures indicating a steep fall in U.S.
industrial production in October.
And analysts expect the price to hold in its current range
in the near-term.
"Gold has looked soggy for most of the week, and yesterday
almost touched the important $274.00 support level. However,
unless broken, we continue to expect the range to persist, given
that it corresponds to both trend line support and the precious
lows, while daily studies are now oversold," JP Morgan
Securities said in a technical report.
Over in silver, the metal remained vulnerable after yet
again failing to extend gains above $4.20 an ounce, analysts
said.
"This does raise the risk of a dump below $4.07, and as such
longs should be exited," JP Morgan said.
Spot silver <XAG=> was last at $4.11/4.13 a troy ounce,
against $4.13/3.15 at the close in New York on Thursday.
SHORTS COVERING GIVES PGMS BOOST
Despite trading quietly for most of the session, platinum
benefited from a short-covering rally in Asian markets
overnight.
Spot platinum <XPT=> was at $426.00/431.00 an ounce, up
$1.00 from the previous New York close.
Spot palladium <XPD=> was indicated at $330.00/340.00, up
significantly from the close in New York of $316.00/326.00 an
ounce.
"As goes the economy, so go the PGMs. Things are a bit
better this week so there may be scope for the PGMs to go up,"
Ross Norman, analyst at TheBullionDesk.com said.
((Kate Haywood, London newsroom, +44 207 542 8058, fax, +44
2-7 542 8077, kate.haywood@reuters.com))
REUTERS
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