Gold Posts Modest Gains
March 21, 2003 06:20:00 AM ET
By Steven Swindells
LONDON (Reuters) - Gold was steady on Friday, but U.S. threats to ``shock and awe'' Iraq with a missile barrage kept many investors on the sidelines and few dared to forecast more than a familiar trading range for the coming week.
Gold, well off its safe haven peak of $388.50, now offers little more financial security than other investments and all the risks of volatile markets.
Spot gold (XAU-) was quoted at $332.50/333.30 an ounce at 5:59 a.m. EST, flat from New York's last quoted $332.50/333.25 on Thursday.
``Gold continues to trade in a narrow range, taking its direction from currency and equity markets. Volumes remain low although there is some indication of decent buying interest beneath $332,'' said John Reade, metals analyst at UBS Warburg.
``The market will now react to the perceived progress of the war with a quick, clean victory likely to lead to some selling pressure in the near term,'' Reade said.
U.S.-led troops swept across the Iraqi desert and British forces on Friday said they hoped to be in Baghdad within three or four days.
Many investors remained on edge, torn between expectations the war could end swiftly and worries about possible torching of oil wells, terror attacks and chemical warfare.
``There is support (for gold) at $332 and resistance at $340,'' said Pauline Hung, chief dealer at Scotia Mocatta in Hong Kong.
Gold swung through a $5 range on Thursday ahead of the start of U.S. air strikes on Baghdad and the launch of U.S. and British ground troops into Iraq. It traded in the lower end of the range as some uncertainties were lifted from the market.
The range was repeated in New York in late Thursday trading.
``We see it moving in a range between $330 and $340 for the moment depending on how investors think the latest news in Iraq might affect the dollar and stock markets,'' a European trader said.
U.S.-led military action against Iraq entered its second day on Friday with military officials forecasting that the harshest attacks were still to come.
A firmer dollar capped any further gains in bullion.
Technically, spot bullion is testing and retesting a support base above $330, but most momentum indicators are still trending down, traders said. This also suggests that pressure may be building for a big move possibly to $320.
PHYSICAL INTEREST AT $332
Offsetting that scenario are standing orders from buyers of physical gold, hungry for stock, dealers said.
``We are seeing some physical interest,'' said Ellison Chu, senior manager at Standard Bank London in Hong Kong. Physical buyers emerged on Thursday, but were less active on Friday.
Many abandoned the market as it rallied to its February 5 high of $388.50, spot gold's loftiest level in more than six years.
Gold prices could easily trend lower, Chu said, and while many shared this view, they would continue to buy physical gold in small quantities at this level, he added.
Gold was set or ``fixed'' in the London morning session at $332.25 an ounce, down from the previous fix of $335.80.
Spot silver (XAG-) was quoted at $4.39/41, down from $4.40/43 at the New York close.
news.moneycentral.msn.com |
