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Comex gold ends flat as PGM profits taken

NEW YORK: Gold futures ended flat Wednesday in a market nonplussed by Tuesday's UK auction results, while profit taking pushed platinum group metals off Tuesday's highs, dealers said.

"Gold is displaying satisfaction with the way the auction came out, but certainly there is no reason to move it up or down from here," said a refinery dealer. "So I think were pretty much still in a trading range."

Comex February gold settled at $286.50 an ounce, off just 10 cents, after trading $284.70 to $287.50.

Turnover was described as lackluster. Dealers said most of the action was rolling over February positions into next active April before delivery period starts on Jan 31.

Estimated final volume in gold was 60,000 contracts on Wednesday, compared to Tuesday's underwhelming official volume of 47,309.

Meanwhile, open interest Tuesday fell 1,360 contracts to 143,913, the lowest since late December 1995, according to Comex. Dealers said the statistic showed some longs had been cleared out during the day's mild slippage, a supportive factor.

Spot bullion was last at $285.70/6.20 an ounce, compared to the late London fix at $289.90 and Tuesday's New York close at $285.75/6.50.

Britain sold 25 tonnes of gold Tuesday in its fourth bimonthly sale in a planned 58 percent reduction of reserves to 300 tonnes, aimed at modernising its portfolio.

It awarded the gold at $289.50 an ounce, a better price than expected. But though bids exceeded the offer by a respectable 4.3 times, the outcome fell in the middle of the four sales, demand wise.

The first auction last July, though 5.2 times oversubscribed, triggered bullion's slump to 20-year lows in August. The September sale was eight-times overbid, fuelling a stunning rally to $338 an ounce.

But the cover at November's sale was just 2.1 to 1 and prices had since been unable to top the $300 an ounce level.

In other central bank news, the National Bank of Belgium is still lending gold, as it has done since 1994, but has respected the September 26 agreement by European Central Bank members to cap their gold market activity for five years.

Governor Guy Quaden told Reuters "We continue to think like the other central banks that gold remains an asset for every central bank. It is just a question of proportions."

The Belgian central bank, one of the first central banks to reduce gold stocks, now has about 300 tonnes. It sold more than 1,000 tonnes between 1989 and 1998 in an effort to help pay down the country's debt.

March silver finished 3.2 cents lower at $5.283 an ounce after trading $5.255 to $5.325. Spot silver was last indicated at $5.20/23 compared to the fix at $5.20 and the previous close at $5.25/28.

Nymex March palladium fell $7.00 to $472.00 and April platinum fell $9.40 to $432.50 in sympathy. Technicians said both metals were way overbought, as contracts set high after high in recent days.

"(Platinum has) got gaps on both sides. A crucial day is coming up tomorrow," said Scott Myers, senior analyst at Pioneer Futures. "If we can't take out $430 and settle below it we could start to charge back up.

"If we break through $430, it's going to look weak on the charts. I think it looks overbought, so my hunch is it's going to start to work lower," he said.

Dealers placed tough chart resistance at $480 in palladium. But $500 an ounce is still the target, with no immediate end in sight to Russian supply scarcity or robust industrial demand.-Reuters