Friday April 3, 5:40 am Eastern Time
Precious metals all higher on technicals, funds
LONDON, April 3 (Reuters) - Gold rose sharply in early European trade on Friday, fuelled initially by stop-loss buying and spurring silver higher in its wake, as platinum group metals added to gains made in Asia, dealers said.
Gold fixed higher at $305.95 after its earlier rise, way up on Thursday afternoon's $300.30 and causing dealers to eye resistance points up as high as $310.00.
Spot metal was last at $305.30/$305.80 versus New York's Thursday close of $302.00/$302.50.
Gold triggered stop loss orders when it hit $303.50, taking it rapidly above $306.00, said one London dealer.
Such orders operate only when a given price is reached, usually to halt losses or the erosion of profit associated with a particular position.
Silver took off shortly after gold's rise, jumping from $6.58 bid to $6.75 in minutes. It was last at $6.74/$6.78 an ounce versus its New York close of $6.56/$6.59.
Gold's strong performance in the face of the dollar's strength against the yen serves only to emphasise the strength of the turnaround in sentiment towards the metal, another dealer said.
''Our people have been talking of interest in gold for 'flight to quality' reasons given the situation in Japan. They see gold still as relatively cheap,'' he said, though he added that upside potential was fairly limited for now.
''In terms of the charts, I am not sure that it will get much over $306.00 towards $310.00. If it were to get above there, it would be a much more impressive rally,'' he said.
Dollar/yen hit 135.10 in Asia, a high last seen in September 1991, after Moody's Investors Service lowered the rating outlook for Japan's country ceiling and its domestic currency rating for the government to negative from stable.
Dollar/yen was trading at 134.65/69 at 1000 GMT, from 133.43/53 late in Europe on Thursday.
The dollar strength against key gold producing currencies in Australia and South Africa had gold last priced in Australian dollars at A$464.94/A$466.41, the high since March last year, and in rand at 1540.42/1543.86, a level not seen since last October.
Opinions differed among dealers over just how much producer selling had taken place in recent days, with some saying they had seen none and others speaking of ''loads.''
One analyst said Australian producers, though not yet as active as they had been when locally priced gold rose in late January, were poised to enter the market at A$470.
''It seems that in terms of deals on the books, it's not like it was in late January when there was a good run up. At that time there were a lot of forward sales already on the books ready to go,'' he said.
''There does seem to be a bit more optimism that the run could go a lot higher. We started with A$460 as the target, perhaps A$470 is now the level people think they can hold off until,'' he said, adding that Australian producers had to balance their views on currency forecasts against the outlook for U.S.-dollar-denominated gold prices.
Platinum group metals (PGMs) were also sharply higher in both Asian and European buying, with one London dealer attributing the purchases mainly to the commodities trading arm of one U.S. investment bank.
''It was one buyer of both platinum and palladium in Tokyo and then again in Europe. You can say it was due to renewed uncertainty about the Russians but that was not really it,'' he said.
Thin volumes and wide spreads in recent weeks have tended to yield exaggerated moves in the metals' prices.
Russia's Finance Minister, Mikhail Zadornov, who was re-confirmed as a member of the new Russian government by President Boris Yeltsin this week, does not know when Russia's exports of PGMs will resume according to Dr John Helmer, a Moscow based analysts with South African investment bank, Standard Bank (SBCJ.J).
Helmer told U.S. and European analysts in a telephone conference call on Thursday that he had had talks with Zadornov indicating that the latter did not know when or whether Yeltsin would sign the export quota for precious metals.
Russian exports of both have been suspended since December 1997, and as Russia supplies about 20 pct of the world's platinum and 60 pct of its palladium, the prices of the metals have been rising.
Platinum was last near session highs at $413.00/$415.00, versus its previous New York close of $405.50/$407.50, while palladium was at $281.00/$283.00 versus $270.00/$272.00. |
