Monday March 8, 6:55 am Eastern Time
Gold firm in early European trade, eyeing upside
LONDON, March 8 (Reuters) - Gold firmed gently during early European business on Monday, moving to the top of its recent range as dealers looked for a test of $289.00 resistance.
London gold fixed at $288.50 a troy ounce in the morning, up on Friday afternoon's $287.90.
Spot gold was last at $288.55/$288.95, 65 cents firmer than Friday's New York close. ''Gold's done nothing this morning but I think the price has firmly established itself above $288.00. I think we now start heading towards $295.00,'' said one London dealer.
Several dealers talked about buying on the part of one U.S. bank as helping to underpin prices.
''One of the American houses has been buying substantial amounts. It looks to me like a mine buyback,'' said one.
Miners typically forward sell a portion of their production to lock in returns and guard against price falls. Buybacks occur when producers choose to cash in gains or to profit from what they see as a turnaround in dollar gold or local gold prices.
Another dealer said $290 resistance on the COMEX April gold futures contract was the first hurdle.
''Although there appears to be a good buy order just below the current market, gold really has to break $290.00 on April and then $290.00 spot before we can get excited about this market,'' he said.
The heavily short-sold market might yield a covering rally if spot prices rose above $292.00 spot, he added.
One dealer said silver prices were likely to dawdle this week as the market awaited the release of Berkshire Hathaway Inc's (NYSE:BRKa - news) 1998 annual report and news on the fate of its 130-million-ounce physical silver stake.
''I think we are probably going to see $5.15/$5.35 while we're waiting for that,'' said one dealer.
Berkshire Hathaway chief Warren Buffett declared the silver position in February last year, sending spot prices to $7.90 as forward markets dried up and leaving the market guessing ever since as to whether, how and when he might get out.
Silver was last at $5.24/$5.27 against New York's Friday close of $5.20/$5.23.
Platinum was down $1.70 at $374.00/$376.00 while palladium was $2.50 lower $345.00/$350.00.
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