FOCUS-Gold firmer on U.S. options, nickel gains on
LME
03:01 p.m Jan 07, 1999 Eastern
LONDON, Jan 7 (Reuters) - Gold rose to test $290.00 resistance
during late European trade on Thursday, boosted by options-related
buying on New York's COMEX exchange as silver hit its range top
amid renewed fund interest, dealers said.
In base metals, nickel gained $75 a tonne to end the London Metal
Exchange (LME) afternoon kerb at $4,120/$4,130, but the other
base metals failed to follow through on recent rallies.
Gold fixed at $289.95 a troy ounce in the afternoon, adding to its
earlier fix at $288.60.
Friday's expiry in COMEX February gold options prompted jostling
for position among investors, one London dealer said.
''There are a few big players there and they are pushing it around,''
he said, adding that silver's rise also helped gold.
Another factor was dollar weakness versus the yen, which raced to a
27-month-high against the U.S. unit amid nerves about U.S.
President Bill Clinton's impeachment process in the Senate.
The yen rallied as far as 109.82 per dollar before weakening to be
last at 110.84/99, with yen gold prices at their lowest since June
1995.
Dollar weakness makes gold cheaper outside the United States,
encouraging physical demand and gold hedge buybacks by
Australian and South African miners.
''The next target is at $293.00, the consolidation point of last
December, but if it closes below $290.00, then it won't be nearly so
positive,'' the dealer added.
Gold closed in Europe at $289.70/$290.20 a troy ounce versus
Wednesday's New York close of $287.50/$288.00.
Nickel yo-yoed up and down through the day, gaining in the morning
rings as bank buying helped to trigger stops that sent three-month
futures up to $1,440 before easing back slightly.
A fresh wave of buying in the afternoon session then pushed the
metal to a firmer, technically constructive close.
Dealers said the advance was triggered by reports that Greek ferro
nickel smelter Larco was to cut production next year.
Robin Bhar, analyst at brokers Brandies, said this movement
illustrated that rallies were possible in the heavily short base metals
markets, suffering from oversupply, if there was even the scent of
production cuts.
''It shows the force of the recovery that could happen if copper
producers and others made similar moves,'' he said.
''The magic word here is production cuts,'' Bhar added.
Dealers said physical buying from stainless steel producers, nickel's
main end market, was thin.
Copper cautiously attempted to advance with help from pockets of
trade interest, but was curbed by scale-up selling into any upward
movements.
Dealers said relentless increases in LME warehouse stocks continued
to pressure the metal and while Thursday's relatively small rise of 775
tonnes offered some encouragement, it did not yet suggest a plateau
had been reached.
Lead managed to hold on to most of the day's early gains, drawing
more than $10 away from the week's earlier 4-3/4-year low of
$461, but zinc's attempt to climb ended in defeat.
In soft commodities, white sugar futures stayed easier but little
changed from the morning session, as raws corrected lower after a
sharp rise this week.
''We're due for a period of consolidation after we tracked a long
way higher in both London and New York,'' said a trader.
Whites leapt $16 a tonne in two days of trading this week to a
six-month high of $256 a tonne, basis front March, on Tuesday. The
technical rally lifted whites from an 11-year low of $207, basis
first-month continuation, touched on Sept. 11.
''The market might prefer to head further north. There is room on the
upside but we could see a few dips as well,'' the trader added.
Cocoa futures on LIFFE closed firmer but off the day's highs on
Thursday, retreating in late trade in sympathy with New York amid
some technically driven profit-taking, dealers said.
Front-month March cocoa closed the session five pounds firmer at
916 pounds a tonne, retreating back below the 20-day moving
average at 922 pounds, while May ended with a six-pound gain at
937 pounds.
Dealers cited some hedging activity, but noted only scant fund short
covering.
''The US (March contract) approached a triple top in the
$1,400-a-tonne area earlier, but the UK contract came up against
resistance just above the 20-day moving average,'' said one dealer.
''We've seen some profit-taking on the March position,'' he added.
Some said the late slip in both LIFFE March and May contracts
could be viewed as a consolidation.
''It was due to ease a touch before heading higher again,'' said one
dealer.
LIFFE coffee strengthened slightly toward the end of Thursday's
afternoon session but traders said stops lurked nearby and a large
fund sell-off was imminent.
''If we get through $1,730 and $1,715 on the March -- those are
numbers we've heard -- so sit down and put the seatbelts on,'' one
trader said, after the market weakened during the afternoon.
Active March ended $5 lower at $1,743, having hit an intraday low
of $1,736 and trading in a $24 range. Volume was 3,371 lots of the
4,760 done.
Some prices at 1700 GMT:
Thursday Wednesday
Ldn Spot Gold ($ per ounce) 289.70 287.65
IPE Brent Crude Oil (Feb) 11.58 10.80
London Metal Exchange
(Three months delivery)
Copper ($ per tonne) 1,444/1,445 1,449.00
Aluminium ($ per tonne) 1,223/1,223.5 1,225.00
LIFFE
Coffee ($/tonne) (Mar) 1,743.00 1,747.00
Cocoa (Stg/tonne) (Mar) 916.00 911.00
White Sugar ($/tonne) (Mar) 253.00 252.30
CBOT wheat ($/bushel) (Mar) 2.87 2.84
((Marius Bosch, London newsroom, 44171 542 8065,
fax 44 171 542 8077,
london.commodities.desk+reuters.com))
Copyright 1999 Reuters Limited. |
