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More positive range for bullion, Mobashar thinks

Gold traded gently lower in Europe on Tuesday morning and is set to weaken beneath $ 280 a troy ounce after a down draft in New York and Asia overnight ended a rally that had taken bullion up to near $ 300.

Gold fixed in London at $ 282.75 on Tuesday morning, sharply lower than Monday afternoon's $ 291.25 and slightly easier than the opening spot of $ 283.75. It closed in New York at $ 285 / $ 286.

The fresh longs created from Friday and Monday's sharp short covering rally could weigh on prices in the days ahead as could producer selling, with dealers striving to lock in the more favourable prices for future sales.

Mobashar Ahmed, Chief Analyst for futuresdata.net, says the $ 280 area is vulnerable and seeing enthusiasm wane as players take stock of a move which was largely driven by speculative money. "There were reasons to cover shorts with US rates low - but that is not necessarily a case for buying, just for covering," Mr Ahmed said.

He added the improving prospects for US growth that helped form the backdrop for the rally would lend support to bullion once it slid back beneath $ 280 to $ 275. "Gold is behaving more like a base metal, rallying because global growth prospects are improving. I think the spike was clearly short covering, but any dip below $ 280 to $ 275 would be seen as buying opportunity.

"We are looking at a more positive range for bullion," he concluded.

Asia mixed

Asia's stocks finished mixed on Wednesday, in a largely muted response to the sell off on Wall Street.

The heavyweight Tokyo market etched out modest gains on optimism over leader-in-waiting Junichiro Korizumi, although the Yen appeared less certain of his ability to push needed reforms to drag the world's second biggest economy out of the doldrums. Tokyo's benchmark Nikkei average closed up 0.61 % at 13827.50.

Singapore ended lower in low key trading and Hong Kong fell, although losses were limited by investment in shares of mainland China companies listed in the territory. Wall Street had presented Asia with a bearish lead into the day's trading.

The blue chip Dow average fell 0.74 % on Tuesday and the high tech Nasdaq dropped more than 2 %. The S&P index, a wider measure of company stock performance, dropped 1.22 % to levels which Mobashar Ahmed, futuresdata.net's Chief Analyst, said signalled further losses to come.

The losses were driven by another series of weak earnings report from such major companies as AT&T internet technologies, Lucent Technologies and Compaq Computer Corp. In addition, the conference board reported that its broad index of consumer attitudes fell in April to match the 4 ½ year low seen in February.

The high tech sell off weighed down Taiwan where the main TAIEX index dropped 1.31 % to 5516.20. Otherwise, Asian markets steered their own course. Koizumi is set to appoint his cabinet ministers on Thursday. The line up is likely to reveal how he has had to balance maintaining party harmony with pushing reform. "The market seems to be factoring in the possibility of little downside risk from the new cabinet," said Mobashar Ahmed, Chief Analyst for futuresdata.net

However, while Koizumi heartened stocks, the yen was unable to regain any of its overnight losses against the dollar. By late trade, dollar was trading at 122.30 yen after gaining around one yen late Tuesday on worries that Koizumi will not be able to push through economic reforms.

Hong Kong shares fell as buyers stayed away from the market, although shares fell as buyers stayed away from the market. Support came from buyers of mainland Chinese companies, which left the Hang Seng index down 0.19 % at 13249. Technology play legend Holding rose 4.27 % AND CHINA Mobile gained 1.36 %. Singapore's Strait Times index ended the day 0.91 % lower at 1670.83 in mixed trade.

DBS Group, South east Asia's biggest bank, rose 1.27 % after it said it may not need to issue new shares to help pay for its S$ 10.50 billion purchase of Hong Kong's Das Heng Bank, the key composite index in Manila rose 1.26 % to 1462.18 pushed partly on news that former President Joseph Estrada would be arrested on charges of economic plunder.

Philippine Finance secretary Alberto Romulo said Estrada's detention would provide positive signals for investors. The biggest loser on the day was the Sheuzhen B share index, which fell 6.66 % to 363.69 points and made a small dent into the 205 % rally, since local investors were allowed to trade the B share market in late February.