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Gold likely to trade around $270/oz

G. Chandrashekhar

MUMBAI, Aug. 13

GOLD traded in a narrow range between $ 275 and $ 270 per ounce last week with the trend remaining weak although support managed to hold above $ 270/oz. Official price on August 11 was $ 272.20, a decline of 0.5 per cent week-on-week.

Thin trading and currency movements continue to be the most prominent feature of the market. The London Bullion Market Association provided evidence of lack of trade activity in the gold and silver market with data showing that the average daily number o f transfers in the two metals fell to new lows in July. Compared to this time last year, gold transfers are running a third lower and silver transfers have halved.

Gold is likely to remain in a narrow trading range around (and probably above) $ 270/oz, with little obvious desire of sellers to push the market lower, according to an analyst with Macquarie Bank Limited. However, ominously, central banks appear to be s elling gold at much faster rate than generally perceived by the market at present while the World Gold Council last week showed only modest gold demand, he added.

The technical picture of gold has considerably weakened, suggesting a further short-term weakness, said a technical analyst. However, as long as physical demand remains robust, then continued support at the current levels should be maintained.

Silver had a tough week falling to a low of $ 4.83/oz bid on August 9 - the lowest price since April 9, 1999 - as sell-stops were triggered following weeks of softness, before recovering to end the week at $ 4.90/oz.

Platinum and palladium both ended the week modestly lower, with prices correcting after recent rapid gains. However trade remains thin and prices extremely volatile. Official Friday price for palladium was $ 790/oz, a loss of 2.2 per cent over the week, while platinum was $ 568/oz, softer by 0.7 per cent.