To:long-gone who wrote (174) From: John Barendrecht Wednesday, Jul 2, 1997 11:14 AM Respond to of 79916
NY precious metals mostly lower early, led by gold NEW YORK, July 2 (Reuter) - COMEX and NYMEX precious metals futures were mostly lower early Wednesday, after gold gapped lower on the open on a sharply weaker bullion market, and platinum group metals lost ground on confirmation Russian term-contract supplies to Japan would resume July 10.
``Gold saw more selling from one commission house, against a background of more Australian producer hedging overnight,'' one COMEX floor trader said.
``We seeing a little buying by locals now after the gap open, and people are nervous that the spike down everyone has been expecting may not last long,'' he said.
COMEX August gold was down $1.40 at $333.70 after the first hour of trade, following a gap down to a new contract low at $332.30 on the open.
In the bullion market, spot gold was quoted $332.50/00, after seeing a London morning fix at $331.45, the lowest fix since March 24, 1993. In New York Tuesday, spot gold had ended around $333.70/20.
Rumors of fresh European central bank selling in the bullion market were discounted by New York traders.
``I think its more the fear of central bank selling that's inducing the funds to increase short positions, but most action in the physical market seems to be coming from producer hedge selling,'' one commission house analyst said.
``You've also had Hong Kong closed for three days due to the handover to China, you there's been some natural buying absent from the market,'' he said.
COMEX September silver was down 0.3 cent at $4.675 an ounce, but holding above the contract lows seen Monday at $4.630.
In platinum group metals (PGMs), NYMEX October platinum was off $3.90 at $408.00, while NYMEX September palladium was down $2.15 at $174.15.
In overnight news, Russia's metal export agency, Almaz, reiterated it would resume shipments of PGMs around July 10, under the recently-signed term-contract, though Japanese traders had apparently asked for earlier delivery.
Meanwhile, U.S. based refiner Engelhard was reported a heavy buyer of about 2,000 lots of palladium futures on TOCOM (Tokyo Commodity Exchange) in December 1997, February 1998 and April 1998 delivery months, pushing up prices sharply.
Engelhard officials were unavailable for comment.
Traders speculated that Engelhard may have been involved in an arbitrage trade by buying yen-based palladium which is substantially cheaper than the NYMEX dollar based futures.
But other traders said such a trade had existed for some time, and a more likely reason was a move to hedge financial losses in the physical market, in case palladium prices rise further due to expected lower Russian exports this year and next year, which may force shortcovering by Japanese broking houses holding more than 50 tonnes of palladium short positions on TOCOM.
Meanwhile, in the physical market remains tight, one month platinum lease rates were still around 60 pct Wednesday, while one month palladium rates were around 90 pct.
Russia supplies about 60 pct of the world's palladium and 20 pct of its platinum, and exports have been suspended since December 1996, pushing spot prices and forward rates sharply higher this year.
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