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London gold awaits U.S. data, options expiry

LONDON: Precious metals prices were quietly steady just under the previous close on Friday as they awaitied U.S. economic data and the Comex options expiry.

Gold was fixed at $395.20 per ounce after $394.30 previously and a London close of $396.00/$396.50.

Dealers were fairly sceptical about oil and grain price-driven inflation signals hitting gold.

"Precious metals are relatively cheap compared with other commodities so they should go higher," a dealer said.

But bullion lacked the conviction to attempt a breakout of its $394-$396 per ounce range in the near term, he added.

Dealers suspected that at least some of Thursday's selling which reversed bullion prices around $396 was coming from South African producers cashing in on the benefit to local prices of a weakening rand.

"The range seems to be $394-$396. There has been good support under that for the past couple of days but the selling caps it at $396," a dealer said.

Dealers said the market was unlikely to make any significant moves ahead of U.S. CPI and retails sales data and in broader terms was guided by oscilations in the volatile stock markets.

March CPI was forecast at up 0.3 percent versus a 0.2-percent rise in February. Retail sales were expected to show a 0.3-percent increase compared with 0.8 percent in February.

"For gold most of the strike prices are fairly close to the market," a dealer said, adding that the $400 call had been a significant strike.

The option expiry would likely occupy thinking on Comex this afternoon and that would also apply to silver where option buying had caught the attention recently, dealers said.

"Large purchases of calls have been made," a dealer said.

"Calls at $5.75 and $6.00 have been active but it is very unlikely they will be exercised," one dealer said.

He added that it if they were, "the market is ready for it" unlike last Easter when out-of-the-money calls were exercised after the European markets were closed for the holiday weekend.

"Anyway the expiry doesn't coincide with Easter this time," the trader said.

Silver was indicated at $5.54/$5.56, up a cent and quiet while platinum was down about $2.50 at $407.50/$408.50 after dealer profit taking. Palladium was quiet and around $1.00 lower at $136.75/$137.75.-Reuter