20000211

Asian gold higher in afternoon on producer moves

HONG KONG: Asian spot gold rose by $5 an ounce on Thursday and was likely to keep climbing on positive sentiment about major producers trimming hedge-related sales.

Gold bullion was quoted at US$311.00/313.00 per ounce late on Thursday compared to New York's previous close at US$306.50/307.50 on Wednesday. Gold rose early on Australian buying but stalled after profit-taking by sellers of physical gold. The rise resumed in the afternoon as the market welcomed AngloGold's statement that it expected less hedge cover in the future.

The world's biggest gold miner said in Johannesburg that it would continue to deliver into its programme of hedging, which would lower levels of hedging in the future.

Gold rose because of "the perception that very large producers will deliver into their hedge programmes," Jon Sutton, head of corporate management risk, commodities at Commonwealth Bank of Australia, said.

Large producers winding down their hedge books would mean a reduction in scale-up selling whenever gold rallies in the future, he said.

Canadian miner Placer Dome, North America's third largest gold producer, called a halt to its hedging, which sparked a rally to a three-month high in the gold price on Monday.

The market was watching developments surrounding financially troubled miner Ashanti Goldfields Co Ltd of Ghana. Ashanti, which was hit by large losses on its gold derivatives hedges last year, suffered a setback in court on Wednesday when a judge ordered the company to refrain from financial undertakings for up to three weeks.

Ashanti is struggling to finalise a rescue plan and is facing disgruntled shareholders.

The worst case scenario is that Ashanti will have to be liquidated, said a mining analyst in London who did not want to be identified.

"People are afraid to go short" because possible Ashanti developments, a trader said.

A rumour that the Bank of England might halt sales of gold reserves, denied by the UK government, also gave the price a temporary boost, traders said.

In Tokyo palladium futures closed mostly higher but off their early highs as Russia offered spot palladium to Japan. Platinum futures ended down, shedding early gains.

Spot silver was quoted at US$5.37/40 an ounce after closing in New York at US$5.34/37 on Wednesday.

Local tael gold was quoted HK$105 up at HK$2,882.

The carry over charge at the Chinese Gold and Silver Exchange Society was 4, unchanged from its previous fix.-Reuters