A small advance in gold prices has faltered again, keeping the market locked in a tight range marked by the rock-solid resistance of $345, dealers said. Spot bullion fixed at $340.65 an ounce from $342.45 previously after a spate of short covering dried up.
But though some participants were quick to blame central bank selling for a reversal from a peak on Tuesday of $344.00 to just above $340.00 on Wednesday, dealers said there was no trace of any significant shuffling of reserves.
"I don't think there is particularly any central bank selling. You would see a tightening in the forward rates. It's more likely to be producer selling," a dealer said.
Lease rates for up to three months were hovering just under one percent, almost unchanged in the last month. Dealers said the price retreated with a failure by some to shake the shorts out as the rally ran into producer selling late on Tuesday, either directly or through options.
The scale of the offers were probably exaggerated by the thinness of trading conditions due to several holidays. Gold could keep its foothold above the critical low of $337.50 mainly with strong physical offtake coming into the scene just below $340, analysts said.
But chart experts, disappointed by Tuesday's fall, forecast a dip to test support at the February 12 low of $336.15. In other precious metals, silver held steadily above the $4.70 buffer. It was indicated two cents lower at $4.72-4.74. "Silver seems to have stabilised. Its next move is likely to be towards $4.84-4.90." said one analyst.
That would mean taking out resistance around $4.80, a level above which silver has felt notably uncomfortable since April. The white metals, platinum and palladium, pursued opposite directions, although stubbornly within their established ranges as dealers awaited news on delayed Russian exports.
Forward rates on both metals were still tight as Japan, the world's leading buyer, scrambled to cover its shortages. "The thing (Russian exports) is no nearer to resolution," said one dealer, adding that platinum was in backwardation out to three months and palladium to six months with one-month lease rates at 9.5 and 13.5 per cent.
