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Comex gold settles lower after midday slip

NEW YORK: Comex gold settled lower on Tuesday after slipping at midsession to four-week lows on stop-loss selling, traders said.

Sell-stops were triggered as players pushed the active June futures through key nearby support at $396.90 an ounce, which held Friday and Monday after a selloff late last week.

June gold settled $1.10 lower at $396.60 an ounce, traded from $397.70 to $395.70, its lowest since March 7. Volume was estimated at 30,000 lots, up from Monday's modest 21,404.

Dealers quoted bullion at $393.60/$393.90.

Several market sources noted talk of stepped-up South African sales overnight, although none had any first-hand knowledge of the business.

One analyst added, however, that recent weakness in the rand would make South African sales more attractive.

Cash market traders saw no signs of significant producer selling in New York today, given the recent slide in prices, although one noted producer buy-back interest.

Option volatilities contracted sharply, reflecting weakness in underlying prices and time decay associated with the upcoming Easter holiday, traders said.

The market will be closed on Good Friday, with many overseas markets also closing Easter Monday. In addition, several players were expected to be absent for the Passover holiday which begins Wednesday evening.

Open interest fell Monday for the second consecutive session, slipping to 190,939, its lowest in nearly three months. Market sources viewed the decline as confirming a healthy shake-out of speculative long positions during recent selloffs.-Reuter