Since WLD loves my predictions I say we successfully test gold support and begin a major rally in the precious metal.....
Wednesday May 12, 6:56 am Eastern Time
Gold matches recent 8-month low on London fix
LONDON, May 12 (Reuters) - Gold matched its eight-month low fix of earlier this week on Wednesday amid ongoing bearishness about Friday's news of Britain's gold sales plans, dealers said.
Palladium barely moved after Russian President Boris Yeltsin sacked his prime minister, its recent rapid price moves leaving it inured to the politics of the world's main exporter.
London gold fixed at $278.00 a troy ounce in the morning, down on Tuesday afternoon's $279.45 in a repeat of Monday's lowest fix since September 1.
''The short-term outlook for gold is now poor. We would not be surprised if gold headed towards the recent lows set last August,'' said Helen McCaffrey, Treasury Analyst for N M Rothschild & Son in London.
''Funds are also likely to help push gold lower by re-establishing short positions,'' she added.
Spot gold plumbed its lowest point since May 1979 last August as it neared $270.00, the trough in a two-year decline on fund short selling and producer hedging in response to feared central bank reserve sales and immediate worries that Russia might liquidate its holdings to stave off economic meltdown.
Gold's latest woes came after Britain announced it would auction 25 tonnes of gold every other month from July to next March in a programme to cut reserves from 715 tonnes to 300 tonnes within a few years.
''Physical demand, which has increased markedly in recent weeks, should help provide support at the lower numbers,'' McCaffrey added.
Britain's surprise statement came as gold had looked set to challenge $290.00 resistance on turning sentiment towards commodities generally and renewed talk of mild inflation concerns about the U.S. economy.
''We believe that most market participants seem to be looking for a rally in gold to sell into as the greater risk remains to the downside,'' said another dealer.
''Perhaps a range of $275/$280 could be on the cards for today,'' he added.
Spot gold was last on support at $278.05/$278.45, just up on Tuesday's New York close at $277.90/$278.40.
Silver, which has held up despite gold's drop, was last unchanged at $5.39/$5.41.
Palladium was last $6.00 higher at $334.00/$339.00 having risen just $1.00 on news that Yeltsin had sacked Prime Minister Yevgeny Primakov.
Platinum was up $1.00 at $355.00/$357.00.
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