NY precious metals end lower, volumes light
NEW YORK, July 14 (Reuter) - COMEX and NYMEX precious metals futures ended lower Monday, but volumes were light, with activity tradionally slow during the seasonally weak demand period of the northern hemisphere summer.
``There are tentative signs that the gold price is forming a new base, but on the other hand many investors are still waiting for gold to revisit the lows closer to $300 seen last week,'' CPM Group research director, Joseph Rosta said.
COMEX August gold ended down $1.40 at $320.80 an ounce, with the August/September spread widening back out to $3.90 an ounce from $3.60 Friday.
August gold has consolidated between $325.00 and the contract lows at $314.60 in the past week, with daily momentum indicators recovering from their oversold condition, while 20-day historical volatility has steadied around 14 percent, up from six percent back in mid-June.
In the bullion market midday Monday, spot gold was quoted $319.70/20, compared to the London Monday afternoon fix at $321.70 and the New York close Friday around $321.60/10.
Gold fixed at a 12-year low last week at $315.75 in London, after news of a sale of 167 tonnes of gold by the Reserve Bank of Australia, which encouraged more short selling by hedge funds.
COMEX gold open interest fell 1,969 lots Friday to 214,421 contracts, but open interest is at its highest levels in 18 months.
According to the CFTC Commitments of Traders data, net short open interest held by funds and small traders rose from 36,168 lots on June 10 to a record 70,665 lots on July 1, an increase of 34,497 lots, representing 3,449,700 ounces (107 tonnes) of gold.
But since the latest CFTC data dated July 1, COMEX gold open interest has risen a further 18,313 lots.
``The net speculative short position on COMEX is probably now 90,000-100,000 lots, more than 50 percent above the prior record,'' one hedge fund analyst said.
But OTC market positions are often two to three times greater than exchange-traded positions, and as a result speculative short positions by hedge funds may have increased by about 500 tonnes in recent weeks, an amount equivalent to one year's production by South African gold mines, he said.
``That is what has broken the gold price, not 167 tonnes of Australian reserve gold sold over six months,'' he said.
But ``the current overall flow of central bank metal delivered via official sales, and central bank lending to fund producer hedging and fund short sales, exceeds anything ever experienced before by this market,'' he said.
By comparison net official sales of gold by central banks for the whole of 1996 was 239 tonnes, according to industry consultants, Goldfields Mineral Services (GFMS), while net producer hedging averages about 200-300 tonnes annually.
But ``once the flow of borrowed gold from fund short sales and producer hedges abates, the slingshot will start to move in the direction of release,'' he said.
``Once the gold price rises above its chart breakdown point of $326.00, the odds are high that technical short selling will reverse.''
COMEX September silver ended down 8.5 cents at $4.275 an ounce, as the contract also consolidated just above contract lows seen last week at $417.50. The September/December spread narrowed further to 6.0 cents an ounce.
The spot gold/silver ratio edged higher to 74.8:1, continuing its recovery from two year lows around 66.00 seen in May this year.
NYMEX October platinum ended down $7.20 at $388.50 an ounce, but spot platinum in the physical market remained above $400 an ounce, quoted $402.50/406.50.
NYMEX September palladium ended down 55 cents at $152.45, with spot palladium around $164.50/168.50.
One month lease rates in platinum eased a little Monday to around 40-50 pct, but palladium lease rates remained firm around 80-90 pct, dealers said.
Japanese trade houses reported last week that some Russian palladium had arrived in Japan, but platinum was not due to arrive until this week.
Russian PGM exports had been suspended for six months. Russia supplies about 60 percent of the world's palladium and 20 percent of its platinum. |
