960402

HK gold closes down

as long holiday nears

HONG KONG: Gold in Hong Kong ended Tuesday slightly down on the previous New York close, following lacklustre trading in the run up to a five-day break that includes the Easter weekend, dealers said.

Bullion closed at US$394.20/70 an ounce, after the overnight New York close of $394.70/$395.00.

Lacklustre is the name of the market in Hong Kong, where physical demand is steady and speculators thin on the ground, traders said.

Apart from some activity from fund managers hoping to push prices higher for a consolidation after the market's long slump, investors were not interested, local traders said.

"The performance so far has been disappointing," one trader with a local bullion house said.

The end of Japan's fiscal year on March 31 had also contributed to sober trading in Hong Kong, another dealer said, as Japanese trading was a major factor here.

"If the exchange in Tokyo becomes more active, it may generate a bit more activity in Hong Kong," he said.

Chinese buying had been slow with the passing of the peak buying period before February's Lunar New Year, one trader said.

China's official press reported this week that local investors were turning away from gold and to inflation-adjusted high-yield bonds or bank deposits.

This had lead to a marked slump in retail sales, reports said. Retailers' profits in the southern city of Guangdong, across the border from Hong Kong, had fallen 30 percent since early 1995.

Another Hong Kong trader said jewellery shops he had visited in China had not restocked after the Lunar New Year rush. Business was quiet but could pick up later in the year.-Reuter