Gold higher in Asian afternoon, edgy about Iraq
Fri February 21, 2003 01:37 AM ET
HONG KONG, Feb 21 (Reuters) - Gold prices pushed higher on Friday ahead of another tense weekend of U.N.-watching and in the wake of a drop in the dollar and a jump in U.S. producer prices, trends seen as spicing up rather than hindering economic growth, dealers said.
"It is the same situation we have seen for weeks now...I wouldn't be caught short at this point, and if I was short, I would square ahead of the weekend," said Jeff Penman, chief dealer at WestPac Banking Corp in Sydney.
Spot gold was trading at US$354.30/5.30 an ounce at 0530 GMT, higher than the Hong Kong open at US$353.50/4.50 and New York's last indicated US$352.25/3.00.
The London afternoon fix on Thursday was U$351.55 an ounce.
The United States is preparing a new resolution on Iraq which it aims to present to the United Nations' Security Council next week, U.S. Secretary of State Colin Powell said on Thursday.
The resolution is expected to state that Iraq is in "material breach" of earlier resolutions. The U.S. is seeking passage of the new resolution to provide the legal basis for a U.S.-led attack on Iraq.
In this climate, gold prices will remain in the US$352-358 range, said William Leung, dealer at Standard Bank London in Hong Kong.
"If we get no news, we could see a retracement to the US$345-348 level," Leung said.
Trading in Asia was relatively light yet nervous on Friday.
"Nobody wants to do anything. We saw some light buying from the Japanese, but that was capped at US$355," Leung said.
Gold prices firmed in trading in New York with the release of U.S. producer price data for January showing a 1.6 percent jump in the price index, more than triple forecasts of an 0.5 percent increase.
The dollar weakened again, giving another technical boost to gold.
Gold hit a new six-year high of US$388-389 on February 5 on fears of an attack on Iraq, then tumbled to around US$341 as European leaders and others called for more time for the U.N. weapons inspectors to carry out their mission.
Bullion prices are back on the way up again, but the market remains very nervous and event driven, with bouts of choppy or volatile trading.
Trading on the Tokyo Commodity Exchange (TOCOM) remained brisk. The benchmark December 2003 contract was trading five yen higher at 1,347 on good volume of 64,944 contracts.
Trade was stimulated by a fall in the U.S. dollar to a day low of 118.23 yen in Asian trade on Friday, despite fears of intervention from the Bank of Japan. On Hong Kong's Chinese Gold and Silver Exchange, tael gold ended the morning session at HK$3,290 a tael, higher than the open at HK$3,285. A tael of gold is equal to 1.203 ounces of gold.
Spot silver was indicated at US$4.64/4.66 at midday break in Hong Kong, lower than the open at US$4.65/4.67.
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