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Rangebound Comex gold cuts gains, silver ends up

NEW YORK: Comex gold futures ended nearly flat, erasing a mild morning advance, while silver held most of its gains after an early bout of short covering, dealers said.

Comex April gold ended off 10 cents at $289.60 an ounce after trading between $289.30 and $291.00. Spot bullion was last quoted at $288.20/9.20, compared to the late fix at $289.15 and the previous New York close at $288.55/9.25.

Gold continued to mark time before Tuesday's 25-tonne British bullion sale, the fifth since July in a plan to reduce reserves 58 percent to $300 tonnes.

"It's in a consolidation range," said Ian MacDonald, manager of bullion trading at Commerzbank. "Pre the auction, whether we make a dip to position ourselves to take in another 25 tonnes from the Bank of England, that's always posible. The market has to find an outlet for it in one bullet, so it has to be cheap enough."

The sale ends the first part of the UK programme to exchange low-yielding gold holdings for reserves in euro's, yen and dollars. Starting in May, 150 more tonnes will be auctioned in six more 25-tonne sales.

But bullion has found support below $290, enjoying strong demand from Indian and MidEast hoarders and fabricators of gold objects and jewelry.

May silver closed up 3.3 cents at $5.165 an ounce, testing $5.10 and $5.20. Spot silver was quoted at $5.11/14, up from Tuesday's New York close at $5.09/11 and London's Wednesday fix at $5.08.

The silver fix was the same as Tuesday in quiet early London bullion business. Funds then came in at the Comex open and reversed shorts booked the day before, carrying May silver above resistance at $5.165-$5.17 from highs on March 3 and 7.

With no fresh fundamental factors, the silver market continues to trade off the charts, and is now eyeing resistance at $5.20, the daily bottom from Feb 24, dealers said.

Meanwhile, Nymex April platinum closed 20 cents firmer at $478.30 an ounce and palladium finished $9 higher at $699 an ounce. The acutely undersupplied market continues to wait for delayed shipments from Russia, supplier of 65 percent of all palladium and 20 percent of platinum.

New York trade in platinum group metals has been severely curtailed since the Tokyo Commodity Exchange halted palladium futures trading last month to rein in runaway prices in the metal, mostly used in automotive anti-pollution devices.

There was little surprise when TOCOM, the largest futures market in platinum and palladium, extended the price freeze Wednesday.

TOCOM will maintain the draconian measures on its April-December contracts until they expire, continuing the emergency steps taken last month to check palladium's wild rally to new highs.

It will also ban physical deliveries against the contracts and will not accept any new positions in them. New positions will be accepted in the benchmark Feb 2001 contract, which had previously been limited to hedging positions.

"It doesn't matter what they do," said a PGM floor broker. Over here if you don't have something else to fall back on its pretty dire." -Reuters