Gold unfazed by U.S-Iraq tension, Indonesia attack

Gold unfazed by U.S-Iraq tension, Indonesia attack

Reuters, London

Gold ticked over in European trading on Monday, losing ground slightly as traders showed reluctance to take positions on the U.S. Labor Day holiday.

Spot gold was quoted at US$312.25/312.75 a troy ounce by 08.59 GMT (3.59 p.m. Jakarta time), down from the New York close of $312.50/313.00 and off the 2-1/2 year high of $330.30 an ounce hit last June.

"Gold looks likely to trade in a range of $311-314 awaiting the markets to return from the Labor Day holiday in the U.S.," said John Reade, metals analyst at UBS Warburg.

Bullion largely shrugged off tension between Washington and Iraq, strong oil prices and worries over a near-term appreciation of the dollar, dealers said.

The market also ignored news of an attack on a convoy of vehicles carrying mainly U.S. nationals near a mine in Indonesia's Papua province.

Operations of the mine, the world's largest copper and gold mine, were not disrupted, the owners, U.S.-based Freeport-McMoRan Copper and Gold Company, said on Sunday.

"Most participants expect the market to be quiet until at least Tuesday," Standard Bank London said in a report on its website.

Signs that leading gold miners were continuing to reduce their forward sales of the precious metal -- a major factor behind's gold's rally over the last 18 months -- also failed to inspire gains.

Miners reduced their hedge positions by 365 tons or 11.7 million ounces in the first six months of this year, a survey by J.P. Morgan showed, industry web site theminingweb.com reported.

The figure represents almost one fifth of all the gold mined in the first half of 2002 and suggests more producers are willing to live or die by market-driven prices.

Hedging -- selling yet unmined gold forward at fixed prices -- is a tactic to lock in revenue and thwart cyclical downturns in bullion prices. But in a rising market, miners risk being forced to sell their caches below current value.