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Comex gold stumbles to lower close on fund sales

NEW YORK: Comex gold finished lower on Thursday on speculative fund sales triggered by weakness in Europe, although losses were pared by light shortcovering near the end of business.

Bill O'Neill, director of futures research at brokerage Merrill Lynch, said falls of up to $4 in European trade caused by US funds selling metal they bought in the wake of Britain's bullion auction pressured Comex gold.

"That started the market weaker," he said, adding lingering concern over central bank sales continued to dampen sentiment.

April gold lost $2.90 to end at $285.40 an ounce after moving from $288.60 to $283.80. Spot bullion was quoted at $284.70/5.50 versus the late fix of $284.75.

Comex floor brokers said gold broke down early due to Europe as speculative fund liquidation came in to press the metal down to its lows.

But some physical interest may have popped up near those levels and bullion trade shortcovering allowed the market to trim some of its losses.

One veteran floor trader it would be interesting to see how European trade will fare after the close in April gold near the $285.30 support level where the market broke down.

O'Neill said that gold, when left in a supply-demand situation, is simply "not functioning as a monetary asset. We have constant producer selling."

Traders said the market is also plainly bracing for the next major chunk of sales from Switzerland, which plans to put on the block around next month part of the 1,300 tonnes of bullion it plans to sell.

British gold sales will also continue. Starting May 23, 150 more tonnes will be auctioned in six more 25-tonne sales running to March 2001.

The rest of the precious metals complex tracked the weakness in gold, while platinum and palladium continued to reel in front of the weekend presidential elections in leading supplier Russia.

"The other metals pretty much ran in tandem with gold," a broker said.

May silver settled at $5.123 an ounce compared with Wednesday's close of $5.165, ranging from $5.17 to $5.10. Spot silver was last quoted at $5.07/09, against the previous $5.11/13, having fixed at $5.105.

Nymex April platinum ended $15.20 lower at $478.60 an ounce and June palladium tumbled $10.05 to $642 an ounce.

The two metals weakened further on expectations that Acting President Vladimir Putin, who is widely tipped to win the Russian presidential polls, will sign the necessary documents allowing exports.

The market is waiting for signs long-delayed Russian shipments will be arriving in the West, where record automotive demand helped propel palladium to all-time highs over $800 an ounce last month.-Reuters