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Asian gold gains in afternoon, awaits UK sale

HONG KONG: Asian spot gold rose on Tuesday after dealer short-covering and was expected to remain quiet in a narrow range before Britain's gold auction later on Tuesday.

Gold bullion was quoted at US$286.00/50 per ounce late on Tuesday compared to US$285.75/286.25 quoted late in New York on Monday.

After gaining late in the session in New York overnight, short-covering by professionals in the United States and Asia lent gold support despite some Australian selling, traders said.

Activity was subdued and the market took a wait-and-see approach to the UK sale of 25 tonnes. The Bank of England's bidding deadline was and the results were expected around.

"I think the market will remain quiet before the auction, probably sticking in a range between US$285.50 and US$287.00," a trader said.

Dealers said they expected strong bidding for Britain's fifth gold auction, and analysts said the auction was likely to be more than four times subscribed.

Physical demand for gold, especially from the Middle East and Turkey, was helping to give support. Also demand picked up in Taiwan and China, which prompted some of the short-covering, a trader said.

He said investors bought gold after the surprise outcome in Taiwan's presidential vote on Saturday and street protests in Taipei on Sunday and Monday.

Britain's decision in mid-1999 to cut its gold reserves by more than half to 300 tonnes pushed gold to a 20-year low of about US$252 last August.

But traders said as the UK sales continued, their impact has lessened and the market was viewing them as more routine.

Spot silver was quoted at US$5.03/06 an ounce after closing in New York at US$5.03/05 on Monday.

Local tael gold was quoted HK$10 up at HK$2,652.

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