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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: PaulM who wrote (9626)	4/8/1998 11:01:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116815

Palladium lease rate rise supports gold and silver 06:43 a.m. Apr 08, 1998 Eastern LONDON, April 8 (Reuters) - Gold and silver held firm on Wednesday, helped by an earlier lease rate rise in palladium, dealers said. Rates for one-month palladium jumped from around 35 percent to nearly 50 percent during early European trade, a sign of tightening physical supply which pushed spot metal prices higher and spilled over into the other precious metals. ''The first thing we saw was the move in the palladium lease rates. They have got very tight again,'' one London dealer said. Gold fixed at $309.75 an ounce in the morning, up on the previous afternoon's $309.20, while spot rates firmed to $309.70/$310.20 from Tuesday's $309.25/$309.75 New York close. Platinum group metal (PGMs) prices have been in the thrall of developments in Russia since the start of the year, with exports from one of the world's major suppliers frozen temporarily for the second year in a row. ''The absence of any real news from Russia is driving the lease rates. It's still very volatile, still very nervous,'' the dealer said. With Boris Yeltsin and his parliamentary foes still at odds over his choice of prime minister, it was hard to see the vital PGMs export licences being signed any time soon. Spot gold's early firmness was in contrast to Tuesday's rapid price swings after reports quoting a Bundesbank official as saying that the metal would play only a minor role in the planned European Central Bank. Bundesbank council member Ernst Welteke, the official quoted in the original report, told reporters later on Tuesday that while gold was likely to form only a small part of the German central bank's transfers to the ECB, that did not mean Germany would immediately sell its remaining holdings. ''Our gold holdings will remain a valuable hidden reserve for the Federal Republic of Germany,'' Welteke said. The apparent turnaround in sentiment towards gold, coupled with currency uncertainties and questions over the near-term performance of world equity and bond markets, had made bullion more attractive, said one London dealer. ''There is a lot of interest in the market, which is probably going to mean a bit of volatility for the coming weeks. I think gold is probably going to trade between $306 and $315 in the short term. A break either way could show us another $5 or $10.'' Cliff Green, a technical analyst with Trend Analysis, said gold's rally of recent days had built a decent floor for the metal. ''We have really now got a base secured in gold, albeit a very small one which is not sufficient to sustain a new bull trend,'' he said. ''That sideways activity we saw over the last three months is probably a good safety net,'' he said. Green saw spot silver as a market to treat with caution for now, suggesting that a better strategy would be to buy dips in gold. ''Spot silver should find support in the $6.15/$6.20 area. If we break that, it could trigger a return to the $5.60 area,'' he said. ''In the months ahead, I can see significantly higher prices but these periods of weakness could still be really quite sharp. The remaining hours before Thursday's expiry in the May COMEX silver option contract could also be volatile. ''I thought we were going to drift off but with options expiry tomorrow, people will be wary of being short ahead of the long weekend,'' said a dealer. ''I see silver in a 30 to 60 cent range with decent volumes,'' he said. Silver was last at $6.48/$6.51, versus its New York close of $6.41/$6.44, while platinum was sharply up at $418.00/$420.00 versus $411.00/$413.00. Palladium was up $10.50 at $284.00/$286.00. ((Patrick Chalmers, London Newsroom +44 171 542 8057. london.commodities.desk+reuters.com)) Copyright 1998 Reuters Limited.