Luckily for gold, there was no dearth of protests following the BoE auction on July 6. In South Africa, hordes of protestors demonstrated in front of the British and Swiss diplomatic missions. A delegation of miners from South Africa descended on London to convince BoE to abort the next auction on September 21.

More significantly, there was unexpected support from the US Congress on the issue of IMF sales. The chairman of the house committee on banking has gone on record to say that heis opposed to the IMF gold sale (10 million ounces) to help debt-ridden countries. If the US blocks this sale, it could seriously jeopardise the entire process. Gold buffs are hoping for a cascading effect on the proposed 1,300-tonne sale of Swiss gold and the BoE auction program.

The effect on gold prices was that the yellow metal made an abortive bid to cross the $256 per ounce barrier, only to be rebuffed at $256.50 per ounce. However, it was not hope all the way. The weak Australian dollar saw Aussie gold producers sell earlier in the week, bringing down gold to fresh 20-year lows at around $252 per ounce. The yellow metal oscillated between $252 and $256 per ounce as the US dollar fell against most Asian currencies, the yen in particular.

Further, the testimony of the Fed chief, Alan Greenspan, before US lawmakers that he would not allow inflation to rear its head was read by analysts that a further interest rate hike was in the offing later this year. This development could provide gold with a muchneeded boost during lean times.

The position of the shorts could also spark a move in gold. But what was disturbing was a reported move by Newmont Mining of the US, the second largest gold producer in the world, to go ahead with a hedging program in view of falling gold prices.

Overall, though, for the first time in the last few months gold looks at $260 per ounce in anticipation rather than at $240 per ounce with apprehension. Silver was stuck near the US ¢511 per ounce mark. It seems that the white metal is in a stupor. However, it could be bidding its time. Friday saw gold at $255.30 per ounce and silver at ¢513 per ounce (gold and silver, London, Friday evening prices).

In the domestic markets, standard gold, in particular, was quite stagnant. It stayed rooted at Rs.4,020 per 10 gms, with a slight interim fall to Rs.3,995 per 10 gms. Silver .999 was more active and recovered after falling to Rs.7,850 per kg. It ended at Rs.7,940 per kg (gold and silver, Mumbai, Friday evening prices).