Daily Gold Update

Source: Reuters

London— Gold was seen consolidating in quiet trade in Europe on Wednesday afternoon and preparing for another modest rally ahead of the weekend, supported by a more positive market sentiment, traders said.

.People are looking for the next attempt upwards,. a trader said.

Gold prices circled round $272 a troy ounce for most of the day and by 1440 GMT spot gold was nearing the intra-day lows, reaching $271.50/$272.00 versus $273.40/$273.90 at the New York close on Tuesday.

The afternoon fix was at $271.50 a troy ounce, down from the morning fix of $272.40.

Traders reported a flurry of sales around $272.50 in London, which nudged the price lower.

Dealers said many market players remained cautiously bullish, but at the same time long.

.The question is will they hold onto these positions or once again become despondent and sell them out early as we saw last Friday. A break to the downside should bring us quickly back to $269.00/$270.00,. one said.

Other traders said they expected gold to renew attacks on higher levels and challenge $275 by Friday, in an already familiar rollercoaster pattern seen in recent weeks.

.The recent history has shown that late in the week, paticularly from trading in New York, is when a lot of major moves occur,. a trader said.

.There is a more positive feeling in the market from traders and most people are expecting the next attempt to $275, although these levels are fairly difficult to get through. But, for the moment, there remains a firmer undertone to the gold market,. he added.

However, traders said the factors supporting the gold market, including a narrow contango and high lease rates, were fairly mild and any rally would again be short-lived.

Market talk about a further cut in interest rates by the U.S Federal Reserve and renewed inflation worries might add more support to the gold market, they said.

.In the current environment it has been quite difficult to pick a sector where is little volatility and with limited risk. It appears that gold is a reasonably attractive safe haven,. one trader said.

Silver softened during the day, spot being last indicated at $4.34/$4.36, down from the New York close of $4.41/$4.43.

.We expect quiet trade with a bias to the downside,. a dealer said.

Platinum was last indicated at $578.00/$583.00 flat on the last New York close and unchanged throughout the session.

Palladium firmed during the day in thin trade, with spot last at $612.00/$622.00, up from Tuesday.s New York close at $607.00/617.00.