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Gold prices consolidating

Our Bureau

MUMBAI, June 18

FOLLOWING the zig-zag movement in gold prices last week, with the prices remaining volatile between $285 and $293 per ounce, marketmen seem to be convinced that the yellow metal is in the process of consolidating and building a base around $285/oz. The official price on Friday last was $290.10/oz, a gain of two per cent over the week.

Last week the market began softly, with the prices falling below $285/oz following the previous Friday's relatively weak New York close ($283.60/oz). However, in a pattern that was repeated several times throughout the week, gold picked up in late tradin g with buying interest from the US breaking back above $285/oz, an analyst said.

``Gold's inability to penetrate resistance at $295/oz is beginning to threaten this current positive trend, but there is more robust tone to the gold market at present and, at least, it appears that gold is building a base around $285/oz'', an analyst at Macquarie Bank Ltd said.

Turnover in gold and silver remained at low levels in May, with the number of transfers falling in both metals, according to the data from London Bullion Market Association (LBMA).

The average daily number of transfers of gold fell to 768, a new low; however, ounces transferred rose nominally from a daily average of 25.2 million to 25.5 million.

Silver was barely stronger over the week, up just 0.3 per cent with its direction still largely coming from the yellow metal, but without the same level of fund interest. On Friday last, the official price of silver was $ 5.05/oz.

The average daily number of LBMA transfers of silver also fell in May to 264 although the number of silver ounces transferred rose from a daily average of 106.9 million in April to 121 million.

Amongst precious metals, analysts said palladium was again the star, rising for most of the week, albeit in very thin trading, reaching its highest fix of $682/oz on Friday (both AM and PM), its highest since March 21. The market is still recovering from the earlier sell-off and higher prices are being exacerbated by the tightness of the physical market. Platinum, on the other hand, remained steady and largely ignored.