The Hindu Business Line : Gold choppy in global market

IN early trades on Thursday in the London market, gold was up by over $4 an ounce touching $498/oz and poised to once again breach the $500/oz psychological barrier.

Large fund interest and limited physical demand have been supporting prices.

Selling by some central banks is seen reining in the yellow metal from running away. Amid all talk of possible future central bank buying, selling from signatories under the European Central Bank Gold Agreement has been consistent, experts pointed out.

A factor to be reckoned with is that the market remains very long (speculative position on Comex have risen substantially) and the biggest buying force (Japanese buying on TOCOM) recently appears to be drying up.

In this situation the downside risk to the market remains high, experts remarked.

"A near-term weakness cannot be ruled out," asserted a London-based precious metals analyst. Prices could test the next technical support level of $487, then $480, the analyst said.

Overall though, interest among the speculative community remains strong and the uptrend is likely to stay intact over the medium term after some pullback.

Experts also pointed out, reports that gold recycling in West Asia remains low despite attractive prices, as well as comments by the World Gold Council that rising prices are unlikely to dampen gold imports into Turkey could add fuel to the bullish mood.

However, selling of gold bars and scrap continues in many parts of Asia.

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