The Hindu Business Line : Further gains in gold likely

GOLD enjoyed a strong week with good trade and fund buying evident for much of the week pushing prices through successive technical levels at ``big'' numbers such as $280 an ounce and $285/oz. Political posturing and escalating military tension between India and Pakistan too added to the bullish fervour.

The upward move stalled at $290/oz and prices eased back with some profit-taking on Friday to close at $285.75/oz (London PM fix), gaining 2.9 per cent week-on-week. ``This was still a firm close and most traders are looking for further gains during week beginning January 14,'' Mr Kamal Naqvi, analyst with Macquarie Research Equities said.

According to the analyst, notwithstanding the technical drivers that were the dominant catalyst last week, there was a noticeably more positive undertone in sentiment towards the yellow metal. This was also seen in gold equities, with the various regional indices enjoying strong rises on the week.

``The more positive view is based on the appearance, finally, of a genuine bottoming out in the downward price trend since 1996, plus the consolidation theme, highlighted by the battle for Normandy Mining which many expect, rightly or wrongly, to result in a marked reduction in total hedging levels,'' Mr Naqvi reasoned.

The latest Comex commitment of traders showed that the net position of large speculators' had turned from a net short by two tons to being net long by 16.7 tons as of January 8. The move was largely driven by technical short-covering. However, since then Comex open interest has risen in line with the price rises, indicating fresh long buying.

High lease rates continued to put silver prices under upward pressure. After breaking to a 14-month high of $4.87/oz (highest level since October 2000), prices eased back late in the week on selling pressure to register $4.76/oz (London AM fix), a gain of 1.7 per cent.

Platinum group metals were largely ignored last week, given the excitement in gold and silver. But both platinum and palladium firmed up. While the former gained 1.7 per cent to close at $479.50/oz., the latter moved up 2.1 per cent to close at $434/oz.

Send this article to Friends by E-Mail

Stories in this Section
Kerala's indecision may impact rubber exports

Sugar improves on judicious release

Further gains in gold likely

Mixed trend at Kochi sale

Cotton futures to consolidate

Downward correction in palm oil futures