28 January 2004, 14:57  Gold stable in Europe, awaits FOMC, option expiry

LONDON, Jan 28 - Gold bullion held at steady levels during Wednesday trading in Europe, consolidating the previous day's bounce away from $400.00/405.00 support, but marking time ahead of January COMEX option expiries and the result of the U.S. interest-rate setting meeting later today. Traders said currency considerations will largely dictate moves, and with the dollar starting to come under pressure once more, gold is likely to cue off foreign exchange movements - against the euro the greenback had dipped to the $1.26 level by late morning. "Currency market volatility will continue to keep the bullion market busy over the coming sessions, particularly ahead of the FOMC's rate decision later today and speculation of a European rate cut," James Moore of TheBullionDesk.com said. The Federal Open Market Committee (FOMC) will conclude a two-day meeting later on Wednesday, but most analysts expect the Fed to leave interest rates unchanged. "I would expect gold to remain in the current $400.00/415.00 range for the moment as traders await the G7 meeting in the next couple of weeks for a clearer indication of global monetary policies," Moore added. Spot gold , which started the day around $410.00, edged up to $411.50/412.25 an ounce by 1127 GMT, up from the steadier New York close of $409.75/410.50.
In other metals, silver was in buoyant mood after the impressive rally on Tuesday, when the temporary decline under moving-average (MA) support around $6.30 was the signal for investment fund buying, which triggered some buy-stops. This lifted the metal above $6.50, with prices subsequently gaining further to $6.58/6.60, up from the New York close of $6.53/6.55. Analysts said that silver was in part reacting to the current boom in industrial commodities, which has seen prices of some reach multi-year highs. "With net long positions in silver very large we suspect that the metal will succumb to further long liquidation if base metals pause for breath," John Reade, of UBS said.
In the platinum group metals (PGMs), there were signs that consolidation in platinum may be ending, with the metal fixed at $858.00 an ounce. Support around $850.00 appears solid, and a re-test of near-24-year highs is likely. "This year's rally in platinum, in contrast, has the advantage of support from decent supply and demand fundamentals; while speculators are implicated in the move higher, they are not the only factor at work," Reade said. Spot was indicated at $856.00/861.00, unchanged from the New York close. Palladium was at $236.00/241.00, little changed from the NYMEX close of $235.00/241.00.//

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