HONG KONG, April 4 - Safe-haven gold sank in Asia on Friday as reports that U.S. troops were winning control of Baghdad international airport sparked light selling by Japanese players. Spot bullion sank to a day low of US$322.75/03.50 an ounce at the start of afternoon trading, its lowest point this year, giving up much of its war premium. Gold's slump in Asia followed on from New York's performance, where the yellow metal tumbled as tanks and troops from the U.S. 3rd Infantry Division met with little resistance on their northward thrust to within 10 km of the edge of Iraq's capital.
"We initially saw good two-way business at the start of the day, with selling from Japanese professionals and individuals," said a dealer with a major bullion bank in Hong Kong. "Sentiment is a bit bearish...there is still the mystery about the stop-losses," the dealer added. The market is waiting for short-sellers to square their positions and realise their profits on gold's drop of nearly US$35 in the past month, which would see prices rebound. In New York on Thursday, gold was last indicated US$324.95/5.65 and London's late fix was at US$323.70. Crude oil prices also reflected market expectations that military operations in Iraq would end sooner rather than later. As at 0515 GMT, May West Texas Intermediate was trading 12 cents lower at US$28.85 a barrel despite some supply worries derived from the standstill in Iraq exports and a major shut-in in Nigeria's production. Hong Kong dealers said physical buyers were "shopping around" in the market on Thursday, but actual buying on Friday was likely to be muted. "Premiums have improved a lot but there is not that much trade yet," said Elison Chu, sales manager at Standard Bank London in Hong Kong. On the Tokyo Commodity Exchange (TOCOM), the benchmark February contract <0#JAU:> was trading three yen lower at 1,245 yen a gramme on good trade of 58,832 contracts. Tael gold , which is traded on the Chinese Gold and Silver Exchange, ended the morning session at HK$3,003 a tael, down from the Hong Kong open at HK$3,016. A tael is equal to 1.2 ounces. Spot silver was trading unchanged over the day at US$4.42/4.44 an ounce.//