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G. Chandrashekhar

MUMBAI, Feb. 23

GOLD last week survived the stop-loss selling that followed clear signs of a delay in military action on Iraq.

Long liquidation resulted in the yellow metal falling to a low of $342 per ounce, its lowest level since the beginning of the year.

The price fall prompted renewed physical buying, while traders were wary of taking significant short positions. Later in the week, war concerns resurfaced to take a toll on the US dollar and the equity markets that saw gold rally above $350/oz. After hitting a high of $354/oz, gold ended the week at $352.30/oz (London PM fix), down 0.6 per cent week-on-week.

The latest CFTC Commitment of Traders' report showed that the net long position in gold collapsed from the previous week's 7-year peak of 207.8 tonnes, falling 52.9 tonnes to 154.9 tonnes as on February 11. This was the smallest net long since December 3, 2002.

``We expect volatility to continue, but generally gold to be well supported in the next two weeks,'' commented Mr Kamal Naqvi, analyst with Macquarie Research Equities.

For a change, silver followed gold, bouncing away from $4.50/oz. Official price on Friday was $4.64/oz (London AM fix), up 2.4 per cent. Short-term direction of the metal still depends on gold, the analyst said.

Platinum and palladium were softer over the week, but stabilised towards the end after the recent long liquidation and appeared well supported at levels of $665/oz and $248/oz respectively. On Friday, platinum ruled $667/oz (down 4.0 per cent) and palladium $251/oz (down 2.0 per cent).

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