To:Pete Young who wrote (118) From: John Barendrecht Saturday, Jun 21, 1997 2:32 AM Respond to of 79910
NY precious metals end mixed, gold tests 4yr lows NEW YORK, June 20 (Reuter) - COMEX and NYMEX precious metals futures diverged Friday, with nearby gold futures registering new life-of-contract lows, spot gold in the bullion market logging its lowest weekly close since 1993, and platinum group metal (PGM) futures edging back up.
``Spot gold's break back below $340 an ounce this week was viewed as pretty bearish by a lot of folks,'' Bankers Trust vice president for commodities, Scott Kerson said.
``The good story is that there hasn't been a lot of fund participation yet, but the bad story is also that there hasn't been much fund selling yet, meaning there's still a lot of selling capacity left in the market,'' he said.
COMEX August gold ended down $3.00 at $339.40 an ounce, after seeing a new contract low at $339.10. Total estimated COMEX gold volume was a moderate 32,000 lots Friday.
COMEX gold open interest rose 1,473 lots to 176,317 contracts Thursday, after jumping 10,437 lots Wednesday, as funds were seen adding to short positions to take advantage of the weak downtrend of the past few months, traders said.
``The rise in COMEX open interest this week reflects short term fund and CTA selling,'' Kerson said.
``But the thing to bear in mind is that in the spot market a lot of people have been trading in tight ranges, buying in the $340-341 range, with volatility getting sold (in the options market), so that rather than the market being sold for a break this week, it was probably actually long,'' he said.
In the bullion market, spot gold ended quoted $337.40/90, the lowest weekly close since April 1993, though spot gold traded down to around $336.50 intraday in February this year.
Earlier spot gold fixed in London Friday afternoon at $338.20, the lowest fix since February 12, 1997.
``When these levels in spot gold were seen in February, lease rates were much higher and the market was super short, but this time there's probably a lot of net selling capacity floating around the market, so the outlook is probably more bearish than the last time we were down here,'' he said.
Implied lease rates for gold for one month fell back below 1.00 pct Friday to 0.89 pct, from 1.16 percent last Friday.
Gold market sentiment was also soured this week by news Belgium a large increase in its gold bullion coin issue program from 1999 to reduced its gold reserves to repay debt.
COMEX July silver ended down 3.3 cents $4.712 an ounce.
COMEX silver open interest rose 3,318 lots Thursday to 93,305 contracts, as dealers try to break silver out of its $4.65-4.90 range since mid-May.
However, NYMEX July platinum ended up $2.50 at $415.10 an ounce, while NYMEX September palladium gained $2.65 to close at $172.85.
In the physical market, the acute shortage of metal pushed short term lease rates even higher, with one month palladium lease rates seen around 130 percent early Friday and one month platinum around 80 pct.
Russian PGM exports, suspended for five months, are due to resume in late June. Russia supplies about 60 pct of the world's palladium and 25 pct of its platinum.
But even if Russian PGM supplies do resume in late June, the key question is how much metal the Russians will supply this year, and how quickly inventories will be rebuilt, analysts said.
In early June, Vladimir Rybkin, the director of Gokhran, the precious metals division of Russia's Finance Ministry, said Russia's PGM exports in 1997 would be just slightly lower than 1996 levels.
In 1996 Russia is believed to have run down its stockpiles by exporting 1.22 million ounces of platinum, compared with mine production of only 700,000 ounces, and exporting 4.60 million ounces of palladium, compared with mine production of less than 2.0 million ounces, according to refiners Johnson Matthey.
``But we believe the exporting of only slightly less PGMs in 1997, as compared with 1996 levels, may be a very optimistic goal since Russia would have to export on average nearly double the monthly amount for the remainder of the year compared with the 1996 monthly average,'' Prudential Securities analyst Clarence Morrison said.
``We believe there is a distinct possibility that much of Russia's above ground supply has been depleted and the world now has to rely increasingly on mine production, which for Russia may decline in 1997,'' he said
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