Accrding to WGC's latest report on gold demand trends, price volatility continued to decline and trading volumes have eased back considerably. The range between the highest and the lowest London fixes during the first quarter was $ 14.55, about $1 less than in the previous quarter and $ 12 less than in the first quarter of 1998.

The average net daily volumeof trades cleared through the London market was 872 tonnes, a reduction of more than 10 per cent on the previous quarter and 25 per cent down from the same quarter in 1998.

Price movements over the period were charecterised by sharp one-day moves of several dollars, followed by extended periods of narrow range trading. The average gold price of $286.77 during the first quarter was $7.05 below the average for the preceding quarter and $ 7.41 below the average for the opening quarter of 1998.

The price openedslightly higher largely ignoring the launch of the euro on foreign exchanges and focussing more on the strength of the yen against the US dollar.

Statistics released by the Commodity Futures Trading Commission (CFTC) showed that speculative shrt selling at the end of 1998 had pushed the net short position of the large speculators on the Commodity Exchange in New York (COMEX) upto 34,586 contracts (107.60 tonnes).

However, with liquidity freely available, gold lease rates were trending lower, the one-month rate falling to 0.48 per cent and the 12 month rate to 1.31 per cent. The first fix of the year was $ 288.25 and gold traded close to this level over the first week, gaining support from rumours of producer buy-backs of hedging positions associated with the strength of Australian dollar. Gold closed the quarter at $279.45.