• PAGE ONE
• INDEX
• HOME

Gold gets support at lower range

G. Chandrashekhar

MUMBAI, Feb. 25

AFTER moving down to $256.25 per ounce, the lowest since September 21, 1999 following selling pressure, gold managed to recover ground with good support at the level, aided by a weakening US dollar and short-covering activity. The yellow metal ended the week at $260.45/oz (London PM fix), with a gain of 1.2 per cent. Silver was, however, struggling.

According to Mr Kamal Naqvi, analyst with Macquarie Research Equities, a notable feature of the week was the pick-up in implied gold lease rates. ``One-month rates have now surged above 100 basis points over the past fortnight to 1.83 per cent and the l ease curve inverted, and this could encourage further short-covering,'' he said.

The crisis in Turkey was unlikely to be positive for gold demand particularly given last year's strong growth. Buying might slow down due to high prices, with the possibility of de-hoarding if the crisis got worse, Mr Naqvi said.

It is also reported that the world's largest gold producer, South Africa produced only 428.3 tonnes in 2000, the lowest since 1954 and down from 449.5 tonnes in 1999 and 492 tonnes in 1997.

Silver continued to struggle from weak demand, steady selling and lack of speculative interest. On Wednesday, it fixed at $4.42/oz, the lowest level since August 1997 and ended the week meekly at $4.45/oz (London AM fix), a decline of 1.1 per cent.

Palladium fell sharply last week due to heavy selling pressure amid confusing reports doing the rounds of the market. The metal declined to $835/oz, the lowest since December 4, 2000, before recovering to $851/oz, a fall of 13.2 per cent week-on-week. Pl atinum, on the other hand, managed to stay firm at $600/oz.