To:John Barendrecht who wrote (171)
From: John Barendrecht Tuesday, Jul 1, 1997 8:12 PM
Respond to of 79916
NY precious metals end mixed, gold weak, PGMs firm
NEW YORK, July 1 (Reuter) - COMEX and NYMEX precious metals futures ended mixed Tuesday, with gold testing news four-year lows, but platinum group metals (PGMs) ended little changed after seeing higher levels intraday.
``The outlook for both gold and silver still looks bearish, though we saw a little consolidation today,'' FIMAT New York trader, John Tyree, said.
COMEX August gold ended down 20 cents at $335.10 an ounce, though managed to hold above the life-of-contract low at $334.60 seen Monday. Estimated total COMEX gold volume was a moderately heavy 42,000 lots.
COMEX gold open interest fell 5,128 lots Monday to 194,341 contracts, after jumping 10,651 lots to 199,469 contracts Friday, the highest level since February.
Gold prices have tended to bottom out or top out in the past when open interest has exceeded 200,000 contracts, analysts noted.
The latest slide has again been led by commodity fund selling, while investors have been driven away from precious metals investments by a strong U.S. stockmarket, a strong U.S. dollar and U.S. CPI inflation falling to a 10 year low.
In U.S. economic news Tuesday, the June National Association of Purchasing Managers (NAPM) index was reported at 55.7, lower than the 56.4 percent expected, suggesting the economic growth may not be high enough to prompt an interest rate rise by the U.S. Federal Reserve at its two-day FOMC meeting Tuesday and Wednesday this week.
However, heavy Australian producer hedging has also been noted recently and both short term and longer term implied lease rates for gold have risen this week, suggesting both hedge fund and producer selling in the physical market, analysts said.
One month implied lease rates for gold rose to 1.42 percent Tuesday, up from below 1.00 percent a week ago, while the one year rate was around 1.81 percent, up from around 1.53 percent a week ago.
In the bullion market, spot gold ended quoted $333.70/20 an ounce, compared to the London Tuesday afternoon fix at $333.70. At the London Tuesday morning fix gold saw a fresh four year low at $336.0 an ounce, compared to the New York close Monday at $333.70/20.
``We remain bearish about gold and continue to see the price trend as sideways to to lower over time,'' Merrill Lynch analyst, Ted Arnold, said in a report.
``So if you are a producer, we would urge you to actively consider doing many more min-max deals, writing more deep out of the money calls and using the proceeds to buy puts in the $320, $300 and $280 region.''
COMEX September silver ended up 3.0 cents at $4.680 an ounce, recovering some of the ground lost Monday, when the contract slumped to a low at $4.630, on a breakout of the $4.70-4.90 range of the past two months.
Meanwhile, NYMEX October platinum ended down 90 cents at $413.00 an ounce, after giving back early gains, NYMEX September palladium closed up $1.40 at $176.00, after also retreating from session highs.
But the physical market remains tight, with one month platinum lease rates were still around 60 pct Tuesday, while one month palladium rates were around 90 pct.
Russian officials had earlier indicated Russian exports of PGMs would resume in late June, but Russian spot market sales have not been noted, and no metal deliveries have been reported, traders said.
But now that the pricing is completed on the recently signed term contract with Japanese trade houses, Russian spot sales of PGMs may begin, analysts said.
Supplies under the term contract with Japanese trade houses are based on average prices in the previous month, and first deliveries under the new contract are expected around July 10.
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.
``Do not sell short platinum or palladium,'' Merill Lynch's Arnold said.
``Consumers, on the other hand, will just have to grin and bear it and continue to live on a hand to mouth basis and take prices as they come,'' he said.
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