030401

Gold lifted in Asian trade by dlr, window-dressing

HONG KONG: Gold prices climbed in Asian trade on Monday, lifted by yen-based buyers' interest in line with a rise in the yen, concerns about duration of the US-led war on Iraq and year-end window-dressing, dealers said.

"We are seeing some buying because they think the war will be extended to three to six months and we don't know what will happen when they go to the capital," said Ronald Lunge, director of Lee Cheong Gold Dealers in Hong Kong.

Most market players were concerned about the likelihood of more suicide bomb attacks by Iraqis against US-led forces when US forces launch an attack on Baghdad.

"It is also month-end and year-end, so the Japanese on the long side will want to push it up," said Lunge. Spot bullion was trading at US$335.50/6.25 an ounce, near the day high of US$355.75/6.50.

This is higher than the Hong Kong open at US$333.90/4.40 an ounce and New York's last US$331.60/2.20.

There was bound to be some boosting of prices or so-called window-dressing to make accounts look more profitable at the end of the year, traders said.

March 31 was the last day of the government's fiscal year and most corporate financial years in Japan.

But the weakening of the dollar meant spot gold prices would be marked up and little additional impetus needed, Leone said.

TYPICAL MONDAY?

Overall, the volume traded on Monday was not significant and dealers warned against making too much of any trend.

"It's a typical on Monday, led by TOCOM buying," said Gordon Cheung, director of Mitsui Bussan Precious Metals in Hong Kong.

"But we are seeing less and less volume going through the market. Investors are worried about what is happening in Iraq. they want to keep a low profile right now," Cheung said.

The market was full of uncertainty, discouraging gold trade in most market.

"I think most just want to find a safe place and stay there views change from to afternoon," said a trader with a major bank in Sydney.

A strengthening of the yen against the dollar usually opens up arbitrage opportunities between dollar-denominated and yen-based gold futures contracts.

And a fall in the dollar's value usually although not always points to a rise in the dollar price of spot gold and Comex gold futures.

On the Tokyo Stock Exchange (TOCOM), the benchmark February contract was trading 12 yen higher at 1,287 yen a gram on good trade of 49,474 contracts.

The yen strengthened a touch against the dollar, rising to trade at 119.71/9.76, compared with Friday's last bid 119.77 yen.

Bullion's gains appeared to be chiefly on the back of a weakening in the US dollar, which was also lower against the euro in Asian trade, dealers said.

But the concurrent rise in TOCOM gold futures was not the norm. "I am surprised to see the Japanese buying TOCOM," Cheung said.

The usual, profitable arbitrage pattern would be to buy one market, for example, a spot gold or Comex futures position, then sell yen-denominated contracts.

Tael gold, traded on the Chinese Gold and Silver Exchange in Hong Kong, ended the session at HK$3,115 a tael, higher than the open at HK$3,098.

Spot silver ended the session at US$4.45/4.47 an ounce, a touch higher than Hong Kong open at US$4.44/4.46.-Reuters