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Quiet Comex gold ends off, rest of complex gains

NEW YORK: Comex gold fell on Tuesday, succumbing to fund sales and general disinterest despite lackadaisical gains in silver and platinum group metals, traders said.

Very light volumes came as participation dries up before Britain's fifth 25-tonne bullion sale, set for one week from now.

"I could give you a quote like 'The bulls and bears fought to a sharp equilibrium,'" joked Leonard Kaplan, chief trader at LFG Bullion Service. "But the bottom line is nothing is happening."

April gold ended down $1.80 an ounce at $289.70, moving between $292.60 and $289.20, where it retested the widely-watched double bottom left on March 3-6.

"We're probing that to see how strong expected support is," said David Rinehimer, head of commodities research at Salomon Smith Barney. "Demand should be good down at these levels, I would anticipate.

"I guess the only thing that would make the market a little vulnerable is if it got to the point where the funds moved from long to short," he said, referring the latest CFTC data showing a 1.9 million ounce net speculative long on the Comex.

Comex floor brokers reported stop loss orders below $289.20, and predicted a fast $2 drop if support gave way.

Estimated turnover in gold futures was 15,000 contracts on Tuesday, compared to Monday's official 21,202 contracts. Analysts said daily volume was normally between 25,000 and 28,000 lots.

Spot bullion was last quoted at $288.55/9.25, around the late fix at $288.75 but down from Monday's $290.00/75 close.

The Bank of England is to dispose of 25 tonnes of gold on March 21, when it will conclude the initial series of equal bimonthly sales begun last July under a programme to slash reserves 58 percent to 300 tonnes.

Starting in May, the second tranche of UK sales will put 150 more tonnes of reserve metal on the market via six 25-tonne auctions.

"The focus is on next Tuesday's UK auction just because of the fact that there's nothing else out there," Rinehimer said. "There wasn't much reaction to the last auction that we had. Although after a while we did turn around with a vengeance and come up quite a bit."

May silver rose 2.5 cents to $5.132 an ounce, traversing a narrow $5.115-$5.155 range. Estimated volume was a 5,000 lots, compared to Monday's final 4,946 lots.

Spot silver fetched $5.09/11, up from the fix at $5.08 and late Monday's $5.06/09.

Nymex April platinum rose $1.10 an ounce to $478.10 and June palladium was up $5.00 at $690.

Business was almost non-existent. The undersupplied and nervous PGMs market was awaiting word on deliveries from Russia and on what TOCOM will do Wednesday when its trade freeze imposed to calm a panicky palladium rally expires.

Scepticism persists on whether Russia, producer of 65 percent of all palladium and 20 percent of platinum, signed export quotas allowing long-delayed deliveries of these metals, used mainly to clean automobile exhausts.

"It's 'show me the metal.' And when they do you're looking at a $50-$100 day on the downside," Kaplan said. -Reuters