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Gold may bounce back after BoE sale

Our Bureau

MUMBAI, July 9

GOLD traded lower steadily for most of last week and lost about 1.8 per cent, with the official Friday, July 7 price of $282.85 per ounce. Modest selling and weak demand pushed the prices down. Silver largely tracked gold to end the week softer at $4.97/ oz., a decline of 0.6 per cent week-on-week.

With trading thinned by holidays in the US early in the week, the losses occurred despite a softer US dollar and a stubbornly high oil price, an analyst at Macquarie Bank said, adding that perhaps part of the explanation came from data showing that large speculators remained net long gold on the Comex. Non-commercial futures and options positions, according to the latest data, rose by 5.5 tonnes over the previous fortnight to 55.8 tonnes as of June 27.

The yellow metal remained soft with the spectre of the seventh Bank of England gold auction. With little buying interest ahead of the auction, the losses last week increased the chances of a small bounce-back after Tuesday, July 11 auction, according to a market report.

``The results of the last (sixth) auction are a good guide for Tuesday - once again the market has sold-off prior to the auction. We expect the auction price to be closely aligned to the spot price (around $283/oz) and for all the gold to be sold but at only a relatively modest level of subscription'', the analyst said.

Platinum and palladium were volatile last week with both weakening for much of the week before recovering most of the losses on the last two trading days. The extent of the previous losses plus the lack of immediately available metal, in a thin market, d rove the recovery, analysts said.