Asian Gold Rebound Leaves Traders Cold

Golds small overnight rebound did little for Asias bearish mood on Friday, but gold dealers in Hong Kong and Singapore said one thing was sure physical demand, albeit strong, would not immediately come to the rescue.

I really dont know what to think, said one Hong Kong-based dealer, referring to golds tumble of 3.5 per cent in the first few trading days of the year.

This time last year we were trying to punch through highs and this year were going to try and punch through and make new lows, another dealer said.

Hong Kong opened easier from New Yorks Thursday close of US$357.80/358.20 an ounce. Dealers reported some two-way trade on Friday morning, but the mood remained gloomy.

 

Its probably professionals in Australia trying to take short positions expecting that producers will sell and drive the market down, said one dealer at an international bullion firm.

A Singapore dealer said there was no incentive for fund managers to shift their funds to precious metals since Wall Street and regional stock markets have been doing so well.

With Wall Street more than holding its own, a fund manager will not transfer his money into gold, one dealer said.

Other traders in Hong Kong reported continued short-covering.

People are worried about which direction gold is going towards and everyone is iffy so theyre mainly squaring their positions, an options trader said.

Gold might break this range tonight or next week. If we can break through $358.50, then itll push to $360, one dealer said. If it breaks below $354.50, then theres no support at all.

Physical demand, while healthy, was not sufficient to buoy golds sluggish prices, Hong Kong and Singapore dealers said.

Hong Kongs shortage of kilobars was expected to ease next week, possibly by Wednesday, dealers said, but premiums had almost doubled to about 150 U.S. cents by Thursday, compared to 80 US cents last week.