Daily Gold Update

Source: Reuters

London— Gold trod water on Thursday afternoon in Europe as dealers cautiously awaited a spike higher, while silver, struggling just above support, seemed to have no friends in the market.

By 1511 GMT spot gold was indicated at $271.80/$272.30 a troy ounce, down from $271.70/$272.20 at the New York close on Wednesday. Afternoon fix was $271.70 a troy ounce at versus the morning fix at $272.65.

Earlier in the day bids edged up to a high of $274 where gold ran out of steam as traders reported selling at this level.

But the market slipped back to $273 immediately and gold appeared to stabilise in its narrow range, dealers said.

.The market is now calm and it.s mainly focused on what.s going to happen next week as at this moment there is no hard news around,. a trader said.

.Anyway, the present level is a good one and if it hits $271, we might see a rebound to $273/274 very quickly,. he said.

A possible new rate cut by the U.S Federal Reserve, renewed inflation fears and an options expiry next week were the main topics of market talk and were seen lending support to gold, but provided no fresh impetus, dealers said.

.I would say that there is good sentiment for gold in the market now. With the present bad financial situation worldwide and when the equities and securities markets are suffering, people think more positively about gold,. a trader said.

Traders said they expected the market to move soon, as greater volatility in the options market was supportive for gold.

.There are some guys there who want to see more action,. one said.

One-month option volatility, an indicator of the market.s view on future price moves, was quoted at between 15.5 to 17.5 percent – above the normal 12 percent.

.When you pay volatility of 17 percent or more, you can.t afford to just sit and wait in a quiet market. So, I expect the market to move quite soon, first to $273 and then to $275. I think it.s worth trying,. he added.

Silver was struggling hard to stay above key resistance at $4.30 but the metal appeared to have run out of support.

.Silver is now in a casino and gambling. But its very risky as silver is alone there. People in the market don.t like silver anymore, it.s too unpredictable, They are already talking about lower prices,. a trader said.

Heavy selling by China has brought silver lower, and prices were expected to come under more pressure over the coming weeks, traders said.

By 1510 GMT spot silver was indicated at $4.32/$4.34 against the New York close of $4.35/$4.38.

Platinum was almost unchanged from morning levels, last at $579.00/$584.00, slightly above the last New York close of $578.00/$583.00, while palladium was indicated steady at $616.00/$626.00, against its last close at $612.00/622.00.