Daily Gold Update

Source: Andrea Hotter, BridgeNews

London— Spot gold resumed a more subdued outlook throughout the morning session Monday, with the market slightly depressed following the news of a major earthquake in northern India which has affected Ahmedabad, the center of one of the country�s main importing areas.

Sellers also reentered the market after the Lunar holidays in Asia, with this pressure keeping prices lower. Elsewhere palladium and platinum heldfirm as skepticism over supplies resumed.

Spot gold touched a high bid of U.S. $263.50 per ounce before fixing at $263.10. The 10-day moving average at $264.27 is proving difficult to break through, traders said.

Industry sources said the key to gold moving back through and holding above the U.S. $270 level is whether the market believes that gold�s weakness has been overdone in recent weeks.

�It could have been argued that gold had been following the U.S. dollar � particularly against the euro � closely for most of last year and there was the potential for some catch-up given the divergence so far in 2001,� said analyst Kamal Naqvi of Macquarie Research.

�However, the lack of follow-through buying following the U.K. Bank of England gold auction on Jan. 23 led to disappointed selling for the rest of last week. Therefore, we are not optimistic that any gains will be held for long, given softening physical demand (in line with the economic slowdown) and steady selling pressure (from the official sector and the trade),� he added.

Silver meanwhile failed to make further gains, with the market confined to narrow trade between $4.78-81 throughout the morning.

Palladium meanwhile held steady despite news that Russian material had arrived in Japan, with the market hovering around its all-time highs before fixing at $1,082.00 from $1,094.00 previously.

Traders said the market remains skeptical that Russian supplies will be sufficient to meet industrial demand.

�The fact is that the market needs more metal, from Gokhran and/or the Russian central bank, both of which still await government sanctioned licenses and quotas. At this stage, it remains far from clear that this is likely to arrive,� Naqvi said.

Platinum remains stable above $600, with the market finding strength from palladium along with ongoing uncertainty over future supplies. Spot platinum fixed at $610.00 from $616.00 previously.