20000202Comex gold ends steady, PGMs sluggish near highs

NEW YORK: Gold futures reverted to quiet range trade on Monday, supported after Friday's nosedive by physical demand while platinum group metals ended mixed in close proximity with contract highs, dealers said.

April gold, the active Comex contract now that February gold entered delivery period Monday, ended 20 cents higher at $286.20 an ounce, touching $284.90 and $287.40. Spot bullion was quoted late at $283.05/65, around London's late fix at $283.30 and near Friday's New York close at $282.75/3.25.

Gold prices found a footing after dropping nearly $7 in a very brief span at lunchtime on Friday. Price-sensitive overseas jewelry fabricators and hoarders took advantage of the dip, dealers said.

Moreover, they said demand from top-consumer India is ususally strong in January and February.

The decline seemed to have transported the metal to a new lower trading range from the narrow band it had traversed since Britain's fourth gold auction last Monday.

"The thing giving this market very good support is physical buying," said Ian MacDonald, bullion trade manager at Commerzbank. "Now the question is are we forming a base here? Is the market trying to consolidate? The central bank sales have really been absorbed very well into the market."

Dealers linked Friday's gold swoon to Australian producer hedge sales, on the back of a weak currency and a spike in the A$ gold price.

Funds were also said to have sold, in part as Treasury bonds gyrated higher and Wall Street stocks prices tumbled on alarmingly strong U.S. economic data, inflationary indications and concern that the Federal Reserve will raise short-term interest rates at its two-day policy meeting starting Tuesday.

March silver lost 1.0 cent to $5.317 an ounce, trading between $5.275 and $5.36. Spot bullion was last quoted at $5.23/25, off the $5.26 fix and the previous close at $5.25/28.

PGMs were less active than last week but still underpinned by surging demand from catalytic converter manufacturers and an acute shortage of metal from Russia, the top palladium producer and number-two platinum supplier behind South Africa.

NYMEX April platinum was indicated at a new contract high at $459.90 and ended up $1.20 at $455.00 an ounce. March Palladium slipped $1.20 to $484.70 an ounce.

In London, where spot palladium reached an all-time high on Friday and platinum touched its highest in 2-1/2 years, the metals were contending for first to reach the $500 mark.

Platinum now seems poised to arrive first, because the Russian supply situation is more dire and conditions even tighter than in palladium, where at least some material has made its way to world markets this year.

"Platinum is slowly cutting the gain that palladium made on it," said James Steel, analyst at Refco Inc. "There are concerns about Russian exports of platinum, although palladium exports appear to be getting out."

No Russian platinum is expected to arrive before mid February. South African platinum miners are going flat out and can not make up for the short fall.-Reuters