To:Alex who wrote (535)
From: John Barendrecht Tuesday, Jul 15, 1997 12:14 PM
Respond to of 82910
NY precious metals mixed early, heavy gold lending
NEW YORK, July 15 (Reuter) - COMEX and NYMEX precious metals futures were mixed in quiet trade early Tuesday, with gold lending to hedge funds and producers continuing to fuel the downtrend, but the platinum group metals (PGM) physical market remained highly backwardated, despite reports the Russians were resuming sales into the spot market.
``There's not much going on on the COMEX floor, but it looks like there's been some producer and fabricator offtake which has provided some cushion, though its not giving gold a bounce yet,'' North American Equity Services floor trade, John Geraghty said.
COMEX August gold was down $1.10 at $319.70 an ounce after the first hour of trade, with the August/September spread narrowing to $3.20 an ounce from $3.40 Monday.
In the bullion market, spot gold was quoted $318.80/30, compared to the London Tuesday morning fix at $319.00 and the New York close Monday around $319.70/10.
But the implied gold lease rate curve became inverted Tuesday, with one month rates, at 2.35 percent, now higher than 12 month rates at 2.16 percent.
``The lease rates just reflect the extent of borrowing by hedge funds and producers to fund short positions and forward sales,'' one senior New York bullion banker said.
``The problem is the higher rates are attracting even more lending by central banks,'' he said.
Gold fixed at a 12 year low last week at $315.75 in London, after news of a sale of 167 tonnes of gold by the Reserve Bank of Australia, which encouraged more short selling by hedge funds.
COMEX gold open interest, at 214,421 contracts Monday, is at its highest levels in 18 months, and net short positions held by funds are at record levels, according to the CFTC Commitments of Traders data.
But OTC market positions are often two to three times greater than exchange-traded positions, and as a result speculative short positions by hedge funds may have increased by about 500 tonnes in recent weeks, an amount equivalent to one year's production by South African gold mines, analysts said.
COMEX September silver was up 0.5 cent at $4.280 an ounce, as the contract continues to consolidate above contract lows seen last week at $417.50. The September/December spread was steady around 6.0 cents an ounce.
But the PGM market remained highly backwardated, despite reports of a resumption of Russiane exports, after a six month suspension.
NYMEX October platinum was up $1.50 at $390.00 an ounce, but spot platinum in the physical market remained above $400 an ounce, quoted $403.00/407.00, while one month platinum lease rates remained offered around 50 percent.
NYMEX September palladium was up $1.55 at $154.00, with spot palladium around $172.00/176.00, with one month palladium lease rates around 80 pct.
Russia's metal export agency, Almaz, confirmed overnight it had resumed exports of PGMs to Japan last week, while Ralf Drieselmann, the head trader at European catalytic converter maker, Degussa, said the Russians had begun offering PGMs in the spot market also.
But U.S. refining sources said they had not seen any offers from Almaz in the U.S. market and in fact believed Almaz had been on the bid on NYMEX September palladium early Tuesday, perhaps to cover short postions.
``The market for palladium especially remains tight, with sponge still at a premium to ingot,'' one refining source said.
Russia supplies about 60 percent of the world's palladium and about 20 percent of its platinum.