Daily Gold Update

Source: Reuters

London— Gold slid on Monday afternoon in Europe, shedding almost $4 on the back of continued selling, but traders said good physical buying could push prices higher.

�There is an American trade house that seems to be a prominent seller…in London this morning and it continued after COMEX opened. It has probably finished,� one trader said.

By 1511 GMT spot gold was indicated at $281.80/282.80 a troy ounce, off intra-day highs of $285.50 and down from $284.20/285.20 at the close in New York on Friday.

Gold fixed at $281.85 the afternoon versus the morning fix at $283.75.

�It appears that there is reasonable good physical offtake at these levels. I think there will be enough buying to push prices towards $284.50 later in the day,� another trader said.

Traders noted that the speculative long positions in gold on COMEX continued to trend lower, as net positions fell by 3,860 lots to some 32,778 lots, compared with a peak of 36,638 lots in the second half of September.

Political and military uncertainty related to the U.S-led attacks against military targets in Afghanistan continued to influence the market, analysts said.

�After the reduction in the spec long position…we believe that there is now more room for further speculative buying on any more negative events,� UBS Warburg analyst John Reade said.

Analysts said charts suggested in the medium-term gold was treading on thin ground as it had failed to sustain a rally on Friday, when some dealers bought gold in anticipation of increased military action in Afghanistan over the weekend

Silver traded quietly and tracked gold for most of the day.