Date:19/04/2006 URL: http://www.thehindubusinessline.com/2006/04/19/stories/2006041900381500.htm

Back Gold resistance seen at $621

G. Chandrashekhar

Strong buying owing to host of reasons

Mumbai , April 18

Gold seems to have established itself firmly over the key $600-an-ounce level on geo-political concerns and rising oil prices. Indeed, the entire precious metals complex is on fire, with platinum hitting fresh all-time highs above $1,100/oz.

There has been strong buying interest all round with surge in oil prices above $70 a barrel, geo-political tensions and strong momentum dominating at present, as a result of which further gains cannot be ruled out, said experts. For gold, the next technical resistance is seen at $621/oz.

Analysts said concerns over the geo-political situation in West Asia have been heightened after a bomb attack in Tel Aviv combined with the continuing nuclear standoff in Iran.

CFTC DATA

Meanwhile, latest CFTC data showed that in the week ending April 11, tactical investors reduced their overall next exposure to COMEX gold on a combination of long liquidation and short-selling.

"Interestingly, prices actually rose over the same time period, indicating the importance of over-the-counter market," said an analyst.

Despite this reduction, the gross long positions remain substantial, which suggests that risks for substantial profit taking still remain.

POINTERS

On the other hand, the gross short position rose to its highest since February 2006, pointing to potential for short-covering to add fuel to price rallies.

Platinum and palladium too remain strong after setting a new record high and four-year peak respectively overnight, fixing this morning at $1,101 and $359.75 respectively.

Speculators on NYMEX increased their net exposure to platinum and palladium in the week to April 11. In platinum, short covering was evident while the gross long position remained unchanged.

The gross long position in palladium rose to another record high, while speculators also continued to take fresh short positions in the market, increasing the gross short position to its highest since mid-October 2005.