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Asian gold higher in afternoon on short-covering

HONG KONG: Asian spot gold edged above US$290 on Wednesday after short-covering offset profit-taking as gold struggled higher in the wake of Britain's disappointing gold auction.

Gold bullion was quoted at US$290.00/50 per ounce late on Wednesday compared to New York's previous close at US$289.50/290.25 on Tuesday.

After overnight gains in New York and despite early profit-taking in Asia, gold opened steady and gained after short-covering and dealers turned bullish despite the weak reception given to Britain's gold auction on Tuesday.

"Dealers are bullish because gold has built a good base in the low US$280s, and despite the disappointing auction, gold still came back," a trader said.

He said the market was likely to try to push gold past resistance at US$291-292 to test the strength of its upward momentum.

Another trader said US funds, which bought gold aggressively on Tuesday after the auction, were the key and gold's next move would depend on whether funds continued to buy or took profits at higher levels.

Gold's gains were limited in Asia by selling from Japan and profit-taking by Hong Kong investors, traders said.

The UK auction of 25 tonnes resulted in an allotment price of US$285.25 an ounce, which was below the spot price of US$285.90/286.40 at the time. The sale was only three times subscribed compared with more than four times subscribed in the previous Bank of England auction in January.

In Tokyo gold futures ended higher in line with overnight rallies in New York.

Spot silver was quoted at US$5.10/13 an ounce after closing in New York at US$5.10/12 on Tuesday.

Local tael gold was quoted HK$33 up at HK$2,688.

The carry over charge at the Chinese Gold and Silver Exchange Society was -3, up from its previous fix at -7.-Reuters