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Asian gold higher in afternoon on Taiwan buying

HONG KONG: Asian spot gold rose on Monday after physical buying by nervous investors in Taiwan in the aftermath of key elections.

Gold bullion was quoted at US$284.80/285.30 per ounce late on Monday compared to New York's previous close at US$284.00/285.00 on Friday.

The Tokyo precious metals futures market was closed on Monday for the vernal equinox and trading will resume on Tuesday.

Gold gained at the opening and rose to a high of US$284.90/285.40 after falling to US$283.50 in New York on Friday on selling by hedge funds which pushed the price down to seven-week lows.

In Taipei riot police clashed with rock-throwing demonstrators in the first sign Taiwan could be entering a new period of political turbulence.

The demonstrators were protesting against the leader of the Nationalist Party after on Saturday's humiliating defeat at the hands of presidential opposition candidate Chen Shui-bian.

"The situation in Taiwan probably caused some investors to move to gold in a temporary shift of portfolio," a trader said.

Stock markets in Taiwan and Hong Kong were lower on fears of tension between Beijing and Taipei over the issue of independence for Taiwan, altthough Hong Kong's Hang Seng Index recovered its losses.

There was little impact expected from on Tuesday's UK gold auction and the price already reflected market expectations, traders said.

"The price pressure is really coming from concerns about other central banks," a trader said. He said the market fretted over whether Brazil's central bank sold gold recently and when Switzerland was going to start selling half of its gold reserves.

Britain will auction 25 tonnes of gold, the fifth such sale since last July after the government decided to reduce low-yielding gold reserves and buy major currencies.

The Bank of England's bidding deadline was on Tuesday. Another 150 tonnes of UK gold will be sold in six auctions in 2000-2001 starting in May.

In coming weeks Switzerland may start its planned sales of gold reserves aimed at disposing of 1,300 tonnes of its 2,600 tonnes of reserves over several years.

Spot silver was quoted at US$5.08/11 an ounce after closing in New York at US$5.09/11 on Friday.

Local tael gold was quoted HK$2 up at HK$2,642.

The carry over charge at the Chinese Gold and Silver Exchange Society was -7, unchanged from its previous fix. -Reuters