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Asian gold lower in afternoon in quiet trade

HONG KONG: Asian spot gold fell on Monday in quiet trading after selling from Australia but got support from physical buying and was likely to keep in a narrow range.

Gold bullion was quoted at US$284.00/50 per ounce late on Monday compared to New York's previous close at US$284.80/285.30 on Friday.

The price dropped early on selling from Australia which traders said followed a news wire report about possible gold sales by the Bank of France.

The report quoted the French newspaper Le Monde which said on Sunday the head of the finance committee of the National Assembly had suggested to Prime Minister Lionel Jospin that Bank of France gold reserves could be tapped to raise funds to cover future shortfalls in the pension system.

The newspaper said in an unsourced article finance committee president Henri Emmanuelli had floated the idea of tapping into a part of the Bank's gold reserves, worth in the region of 27 billion euros.

A spokesman for the Bank of France was not immediately available for comment.

After an initial fall, gold steadied and remained quiet, traders said.

The likelihood of Bank of France gold sales seemed small because France was a member of the European Central Bank, which has pledged to limit gold sales for five years, a trader in Hong Kong said.

With the slip in the gold price from a high of US$291 last week, physical demand has gotten stronger, traders said.

But gold could test lower and was likely to trade in a US$282-288 range.

"The market looks weak. We are trapped in a narrow range," a trader said.

Gold was having a difficult time attracting investment because other markets, such as stocks, bonds and oil were more exciting, he said.

In addition, "the hedge funds are getting ready for quarter-end results and will be taking profits," he said. Recent moves downward from US$291 have been the result of position squaring rather than fresh selling.

Spot silver was quoted at US$5.09/12 an ounce, unchanged from the closing price in New York.

Local tael gold was quoted HK$7 down at HK$2,637.

The carry over charge at the Chinese Gold and Silver Exchange Society was -6, up from its previous fix at -7.-Reuters