20000418

Asian gold higher in afternoon, focus on Wall St

HONG KONG: Asian spot gold rose on Monday after strong short-covering triggered by weakness on Wall Street, which will continue to call gold's tune, traders said.

Gold bullion was quoted at US$284.50/285.00 per ounce late on Monday compared to New York's previous close at US$282.50/283.50 on Friday.

"While the stock market is showing losses, there is potential for gold to rise a little more, but I don't think we can get carried away with the possibilities," a trader said.

The declines of 9.72 percent in Nasdaq and 5.64 percent in the Dow Jones blue chip index followed higher-than-expected inflation as reflected in a 0.7 percent rise in the US consumer price index for March.

Traders said there was disappointment that the record drops in stocks on Friday and a threat of higher inflation failed to produce a bigger rally in gold.

"Gold basically gave up the ghost fairly easily in an environment of potentially rising interest rates and crashing stock markets," a trader said.

Potential positives for gold were continued volatility in stocks and a weaker dollar, which could make dollar-priced gold more attractive to some buyers.

The dollar fell to two-week lows against the yen in Asia and was trading just above 103 yen late in the day.

Gold was showing good resistance at US$285, a trader said, adding that if it breaks above that, the next level would be US$287 or US$288.

But gold could only expected limited benefits from safe-haven buying amid the sharp declines in stocks, traders said.

"There is no reason to buy gold on stock market problems. People would rather go into cash or bonds," a trader said.

Physical buying in Asia was mostly quiet and few speculators were willing to go short, traders said.

In Tokyo gold futures ended lower as the yen's advance against the dollar outweighed hopes that gold would benefit as a safe haven for investors.

Spot silver was quoted at US$5.13/16 an ounce after closing in New York at US$13/15 on Friday.

Local tael gold was quoted HK$15 up at HK$2,641.

The carry over charge at the Chinese Gold and Silver Exchange Society was nil, up from its previous fix at -2.99.-Reuters