960416

HK gold

ruffled on

overseas

speculation

HONG KONG: Hong Kong bullion ended at US$393.40/90 an ounce on Tuesday against New York's US$393.25/75 close on Monday.

Local gold ended HK$2 lower at HK$3,626 a tael

Hong Kong's loco London gold market stirred slightly under renewed speculative activity from overseas investors, mainly from Tokyo, said gold dealers at branches of Western banks.

"If spot London gold in U.S. dollars remains stable and the dollar goes up against the yen, then gold in yen can go up as well," said a bullion dealer at a large European bank.

Currency swings in Japan regularly spark movement in Hong Kong's gold market as Tokyo investors buy in Hong Kong to hedge against a falling yen.

Hong Kong's gold market also saw some speculative activity--both buying and selling-- from U.S. fund managers, industry sources said.

Australian mining companies were only expected to join the speculative fray in the Hong Kong market should gold rise above the US$400 level, bank sources said.

Some investors are now choosing to cut their losses, disappointed by a lack of shine in the gold market, the sources added.

Meanwhile, physical demand in Asia continues to be strong, the bank sources said, but noted that volumes were only "average."

Taiwan markets still exhibited some volatility following political clashes with China prior to the March presidential elections, the sources added.

Gold dealers saw support at US$392, noting that if the yellow metal dropped below US$392, prices would likely fall to US$388-389 and remain in that range.-Reuter