Alex: London gold bounces $3.00, remains vulnerable
You are right about the Swiss: it was just a recommendation to sell at a convenient time. The market over reacted. Read below.
Sergio
Monday October 27 6:12 AM EST
LONDON, Oct 27 (Reuters) - Gold bounced a little from a fresh 12-year low on Monday, gaining three dollars in early European trade while remaining badly bruised by Switzerland's proposed gold sales plan.
Gold fixed at $311.80 an ounce on Monday morning, its lowest since its July 8, 1985 level of $309.25 but up on Monday's early spot price low of $307.75/$308.25.
It was late trading in New York on Friday which really pummelled the gold price as U.S. traders reacted to details of Swiss gold sales plans which emerged early in the European day.
The news caused gold to drop gradually from $322.00/$322.50 on Friday before New York opened, when it shed $4.00 to $316.00 bid. It held there until Europe's close, when U.S. fund-selling lopped off a further $7.00.
Swiss officials recommended a phased sale of 1,400 tonnes of gold, more than half its reserves, to pay for a planned humanitarian fund and bolster current accounts.
One London dealer said the market was very hard to read.
''I think that we could bounce a little but really, it's fingers in the air (uncertain) at the moment,'' he said.
''I think Friday got the bears going and I guess they may want to press that advantage home today,'' he added.
Michael Wagner, a trader at brokers Brandeis in Frankfurt, saw gold prices targeting $300 after Friday's plunge, with the next important level the 1985 low around $280.
''I can't see why gold should make a rally on the upside over the next few weeks...Those buying now will have to be very brave,'' Wagner said, adding that gold could correct after hitting $300 and before sinking lower to $280.
''I don't think there's much support between the $309 we have now and the $280 we saw 12 years ago,'' he said.
The market plunge hit gold stocks in Canada, South Africa and Australia, although Australian producers saw help coming from
their currency's weakness versus the U.S. dollar.
Physical trading in gold kicked in at $308.00 an ounce in Asia on Monday, fuelled mainly by Indian festival-related buying, which in turn sparked a short-covering rally by traders.
Silver, having suffered along with gold on Friday, rallied from its early low of $4.75/$4.77 on Monday to trade at $4.82/$4.84 by 1100 GMT.
Platinum held up amid continuing supply worries at $412.00/$414.00, down $1.00 from Friday's New York close, with palladium steady at $203.50/$205.50. |
