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NY metals end firmer after week of price troubles

NEW YORK: Precious metals futures ended Friday on a steadier note, correcting a bit after starting the week with heavy losses attributed to the unwinding of safe-haven and stockpiling purchases at the end of 1999.

"You have got a minimal range in silver and you've got a minimal range in gold. You are looking at consolidation across the board after the last several days of down moves in platinum, silver, and gold, for that matter," said David Meger, metals analyst at Alaron Trading in Chicago.

Comex February gold rose 50 cents to $282.90 an ounce, moving between $282.00 and $284.50. Spot gold was last quoted at $281.50/2.00, compared to London's afternoon fix at $282.10 and the previous New York close at $280.70/1.70.

Dealers said the appetite for precious metals from fabricators and hoarders responded positively to the moves down. Gold garnered support at $280 an ounce in both bullion and futures amid reports of healthy consumer buying.

"The market has already made its Y2K adjustment back down," said David Rinehimer, head of commodities research at Salomon Smith Barney. "Now the focus has shifted more to the outlook for central bank supply and what kind of demand we see down at these levels."

The market is starting to look ahead to January 25, when the Bank of England will conduct its fourth 25-tonne gold auction.

Surprisingly weak demand at Britain's November sale, when gold was alloted at $293.50 an ounce, sparked a selloff into early December. But the question remains how quick will consumers be to pick up gold coins and trinkets if it stays cheap.

"Lower prices are triggering demand in general. Certainly we still have a good demand outlook relative to the overall outlook for the world. Above-trend growth and rising equity markets could stimulate pretty good demand for jewelry," Rinehimer said.

The silver market also worried about prospects for official disposals after reports this week that China, now in the midst of a domestic silver market liberalisation, could start selling some of its surplus silver holdings in the market.

March silver settled up 2.8 cents at $5.195 an ounce, trading between $5.15 and $5.215. Spot silver last fetched $5.15/17, compared to the $5.135 fix and the previous close at $5.11/14.

Platinum group metals recovered a bit as well, though remain well off the contract highs set last week, when concerns about deliveries from Russia promoted fund buying and consumer inventory accumlations.

Platinum fell to a six-week low on Thursday, in the wake of this week's signing away by Acting President Vladimir Putin of legal roadblocks that had held up Russian PGM exports in 1999.

Russia is the number-two platinum producer behind South Africa, accounting for 20 percent of supply.

Dealers said platinum lease rates had come down to around 35 percent in the one-month term, from 40-45 percent on Thursday, in anticipation of metal arriving on market from Russia.

Lower lease rates reduced the forward purchase discount, or backwardation, which made it less of a bargain to buy and encouraged unwinding of speculative bets on more appreciation.

But scepticism persisted that the necessary export quotas and licences will all be granted in a timely fashion, which could cause further delays in shipments and support prices.

NYMEX April platinum rose $2.00 to $396.00 an ounce and March palladium gained $8.60 an ounce to $443.90.-Reuters