Gold steadies after Monday fall, could head lower
06:13 a.m. Dec 30, 1997 Eastern
LONDON, Dec 30 (Reuters) - Gold steadied on Tuesday after Monday's
four-dollar fall, hovering above $290 an ounce as analysts and dealers
offered scant hope it would hold that level for long.
Gold fixed at $290.90 an ounce in the morning, down from Monday
afternoon's $293.05, as the spot held steady during early European
trade. With spot gold last below Monday's London close of
$291.80/$292.30, analysts saw it going lower.
''They already tried it in December when it came very low. I think $280
was the target, everybody was speaking about it and speculators are
really looking to get it,'' said Michael Wagner, chief trader in
Frankfurt for brokers Brandeis.
Wagner saw no imminent change in the picture for gold mining output,
saying the sector would not act as any sort of saviour for gold while
current production continued.
''The supply side does not influence the market at all for the moment.
There are a few announcements (of mine closures) but we have also seen
some mergers so we may see new mining companies, with lower costs,
producing nearly the same amount of gold as the old ones,'' he said.
''I could see the supply dropping in two or three months time,'' he
said.
Wagner added that economic problems in Southeast Asia had damaged demand
there and foresaw net exports from some countries if dishoarding
continued.
Part of the reason for gold's faltering efforts came from continued
dollar strength against the Australian unit, the latter still buffeted
by the knock-on effects of Asian financial troubles on commodity prices
and regional sentiment.
The Australian dollar was last at A$0.6535/40 against the U.S. currency,
still within the $0.6490/6605 range held for the last fortnight and
waiting for pointers.
If holed on the downside, it could challenge the 10-year low of
$0.6410/20 of October 1993 and possibly the deep 60 cent trough touched
in 1987, a prospect local miners would grab with relief given current
U.S.-denominated gold prices.
That effect was evident in Hong Kong, where local dealers saw gold's
rally to nearly $297.00 on Christmas Eve snuffed out by renewed producer
selling.
''We hear that producers are selling the market at $295-$297,'' said one
Hong Kong trader.
As for the rest of the precious metal complex, only palladium moved
significantly from its Monday close in early trade, putting on $7.00 to
reach $204.00/$206.00 an ounce.
((Patrick Chalmers, London Newsroom +44 171 542 8057.
london.commodities.desk+reuters.com))
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