HONG KONG, April 16 - Gold advanced in light, cautious trade in Asia on Wednesday, as the market prepared for a long weekend that could see major developments in the U.S-led war in Iraq amid calls for a greater U. N. role in the setting-up of a new government, dealers said. "I think that we will stay right around here for the next 24 hours. There is certain to be a substantial amount of strikes in the marketplace at US$325," said Jeff Penman, chief dealer at Westpac Banking Corp in Sydney. Spot gold was trading at US$324.15/4.65 an ounce, higher than the Hong Kong open at US$323.80/4.30 an ounce, but lower than New York's last quoted US$324.70/5.20. Custom-made options, devised by banks for their clients around the world expire at mid-month and often can cause some volatility in the market. But this factor aside, gold prices looked relatively steady with a downside bias in the coming week, traders said.
"On a one-week basis, I think that we are going to US$320, Penman said. The market's sideways move was in response to the relatively lacklustre performance of stock and foreign exchange markets and to daily commments from U.S. officials in Washington warning Syria not to give any assistance to Saddam Hussein and his government. It was also taking into account the risks of getting trapped in a position ahead of the coming four or five-day weekend with so much of Iraq still not under coalition control. Many financial markets in Asia will close on Friday, April 18 and Monday, April 21, to mark the Easter holidays. On Tuesday, British and American officials opened talks on the future of Iraq with leaders of Iraq's religious and political factions but the meeting was boycotted by some key groups. Technically, there was very good support for gold at the US$318-319 level and resistance remains at US$328-330, traders said.
On the Tokyo Commodity Exchange (TOCOM), the benchmark February contract <0#JAU:> was trading two higher at 1,253 yen on moderate trade of 29,359 contracts. The rather dull TOCOM trade can be partly attributed to the fact that the dollar moved little against the yen on Wednesday, traders said. At 0505 GMT, the yen was trading at 120.26/0.29 yen to the dollar, little changed from Tuesday's close at 120.25 yen. Tael gold , which is traded on the Chinese Gold and Silver Exchange, ended the morning session at HK$3,010 a tael, compared with the open at HK$3,006. A tael is equal to 1.2 ounces. Spot silver was trading a touch weaker at US$4.49/4.51, down from the open at US$4.50/4.52 an ounce.//