17 Jan 2005 14:37
17.01.2005 13:26:28 Europe gold seen steady in range, tracks dollar
LONDON, Jan 17 (Reuters) - Gold prices were largely unchanged on Monday in Europe, tracking a range-bound dollar/euro as traders forecast quiet conditions with the U.S. market closed.
Spot gold had dipped to $422.25/423.00 a troy ounce by 1207 GMT, versus New York's late quote on Friday at $422.70/423.20.
Analysts said gold would continue to take its lead in the short term from currency moves.
The dollar held within recent ranges against the euro, some five cents above December's record low, trading at $1.3097/99.
"Generally, the dollar continues to be the major source of influence with traders also talking of the potential for a short-term bounce," Barclays Capital said in a daily report.
The bank said the underlying trend still appeared to be lower, noting an overhang of stale long positions were casting a shadow over the market.
However, several other analysts pointed out that significant long liquidation had already taken place this year, noting the net long position on New York's COMEX gold futures had last week declined to its lowest since mid-August 2004.
"The release of the COTR (Commitments of Traders Report) on Friday vindicates our view that the sell-off in gold has gone far enough and we expect gold to rally, both in euro and U.S. dollar terms," said John Reade of UBS Investment Bank in a report.
Gold had tumbled nine percent from December's 16-1/2-year peak when it bottomed at $416.65 in early January.
It has since been confined to a $418-427 trading range, which most traders see remaining in place for now.
The New York COMEX market is shut on Monday in observance of Martin Luther King Day and will re-open for business on Tuesday.
IMF GOLD
Analysts also noted a proposal by the world's biggest gold producer South Africa to back a British proposal to use IMF gold reserves to write off the debts of poor countries.
South African Finance Minister Trevor Manuel told Reuters on Monday that revaluing of the International Monetary Fund's gold was "very necessary".
He also said South Africa was not against selling the institution's gold reserves as long as this was managed to avoid swings in the bullion price.
Under a 1971 agreement, most IMF gold is valued at just $40 to $50 an ounce, about a tenth of the current market price of gold.
Bearish gold analysts said the fact that actual gold sales were now being considered was significantly more bearish for the gold market than a paper revaluation.
More bullish analysts still thought that, as in 1999, it would be impossible to gain a consensus on outright IMF gold sales, but said revaluation was a possibility.
Other metals were largely stagnant, with silver edging up to $6.59/6.62 from $6.57/6.60. Platinum slipped to $853.00/858.00 from $854.00/857.00, while palladium was unchanged at $182.00/187.00.