Gold News & Info

Source: Reuters

London— After a solid, steady performance this week, on Friday gold was approaching the end of the week on an upbeat technical note and an improved mood overall after an overnight surge in the spot market.

But traders remained wary of the metal.s upside potential lasting too long, and profit-taking and selling opportunities would probably not be missed if the price moves higher, they said.

.A slightly weaker U.S. dollar has fanned the flames somewhat and liquidity is still an issue,. said one dealer.

At 1005 GMT spot bullion was at $274.50/$275.00, down from $275.10/$275.60 at the last New York close on Thursday.

.The $275 level is important and if spot can be sustained above this level in the near term then the market is likely to adjust to a new higher range,. said Rhona O.Connell at Canaccord Capital.

.Some profit-taking is already in evidence, and there may well be more to come, but the physical market is still backing up this latest move,. she added.

.The market remains wary of nervous conditions, but the longer-term fundamentals continue to suggest that gold should gradually improve over the coming months..

In the options market activity was more subdued than when gold rallied close to $300 three weeks.

.Implied volatility has increased in line with spot, however the notable difference in this rally (compared with the one in May) is that there is no sign of any rushed buying of options,. said UBS Warburg.s analyst John Reade.

.Volatility is higher because there are few sellers around, rather than because of firm demand. Forwards remain subdued with a bias to ease in the short end of the curve..

The one-month rate was last around 2.00 percent.

Reade added that with the COMEX-trading speculators now long an estimated 4.0 million ounces, long liquidation would pressurize gold once the metal fired up its momentum. Silver was valiantly trying to break higher amid an improving technical picture and helped by gold.s firmer tone, but volumes remained low and demand muted, traders said.

They reported good buying in one-year $5.20 call options from one U.S. bank on Thursday and this appeared to have provoked some buying interest in the metal.

At 1005 GMT spot silver was at $4.44/$4.46, down from the New York close at $4.47/$4.49 on Thursday.

In the platinum group metals, after falling for the past couple of weeks, platinum and palladium found good buying interest at the fixes on Thursday towards the bottom of their recent ranges.

.After the recent declines in prices, buying interest has reappeared in both metals. We expect platinum to be supported around the current level but fear that palladium could come under further pressure,. said Reade. Palladium was holding around the psychologically important $600 level, last at $600.00/$610.00 from New York.s close at $597.00/$607.00, while platinum was at $581.00/$586.00 from the last New York quote at $576.00/$583.00.