Bill Murphy
Thursday August 6, 11:15 am Eastern Time
Gold stuck in range, shrugs off Canada sales news
LONDON, Aug 6 (Reuters) - Gold remained locked in a range on Thursday in late European
trading, shrugging off news that Canada had sold 168,000 ounces, dealers said.
Gold was last quoted at $287.60/$288.10 an ounce, from the previous close in New York at
$287.70/$288.20. Bullion remained in a range between $286.80 and $288.20.
Dealers said gold encountered difficulty breaking through $288.50.
''It is relatively quiet, there was a bit of selling pressure this morning but it failed to move the
market,'' one European dealer said.
He said he did not see much potential for gold to move higher, adding that bullion shrugged off
news that Canada had sold 168,000 ounces in July.
Canada's Finance Department said on Thursday the country had sold 168,000 ounces of gold in
July, boosting its foreign reserves by US$55.4 million.
Its holdings stood at 2.9 million ounces as of July 31, the department said. It was the first sale of
gold by Canada since October 1996.
The sale represented a reduction in the book value of Canada's gold holdings of US$8 million,
and an increase in the country's foreign reserves of US$55.4 million.
Dealers said gold remained very muted and seemed to have ignored the weaker yen in later
trading on Thursday. Weakness in the yen has directly hit dollar gold prices for weeks now, with
bullion dealers using the yen as a pointer to Southeast Asian gold demand.
''The dollar/yen has done nothing today,'' one London dealer said.
Dealers said even though the bullion market was relatively thin at the moment, the news failed to
make an impact.
''The price did not move at all. For a place like Canada which is a natural gold provider...It
highlights the fact that no matter what the (World) Gold Council says, central banks will be
quietly selling still,'' another dealer said.
Gold tends to be negatively correlated with other asset classes and fell to an 18 year low at
$277.00 an ounce this year as the U.S. stockmarket and the dollar have risen steadily in the past
eight years.
But gold prices are not far from the marginal cost of production for many mines and producer
hedging and central bank activity has been light in recent weeks, allowing gold to consolidate
around current levels.
Gold prices are not seen recovering much ground until the slow summer demand period passes
for jewellery fabricators and until the September and October Hindu festivals revive demand in
India.
Silver was last quoted higher at $5.44/$5.47 an ounce against the previous close at $5.40/$5.43,
and dealers said the metal was struggling to go above $5.50.
''If gold does not stabilise at the area where it is now, silver will go down again,'' one dealer
said.
Platinum and palladium moved higher in European trading. Platinum was last quoted at
$381.40/$383.40 against the previous close at $375.50/$377.50.
Palladium was last quoted higher at $291.00/$301.00 against Wednesday's $287.00/$297.00
New York close.
regards
gmweber |
