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SCMP Reporter

PRECIOUS metals soared in London yesterday amid massive fresh buying from United States investment funds.

  Gold jumped to its highest London fix since early October at US$392 an ounce as hectic buying on New York's COMEX lifted the metal.

  Silver and platinum were also active, rising above overnight highs to reach 540 cents and $440 respectively.

  Gold briefly touched $400 an ounce in New York futures trading as the metal also got a boost from higher than expected US final fourth-quarter gross domestic product figures.

  'The charts look good, the weakness in the dollar and continued fund buying based on Thursday's technical breakout in silver' contributed to the new gains, one New York trader said.

 In New York, COMEX gold extended its early rally as most-active June surged briefly above $400 an ounce, the first time a most-active contract has breached that level since late September 1994.

  June had pulled back somewhat to $397, up $8.40, after earlier hitting a high of $402.

  One trader said weakness in the US dollar and a positive outlook on the charts helped fuel the rally.

 In Zurich, precious metals were higher in Europe in the wake of Thursday's interest rate cuts in Europe, but profit-taking was seen limiting further gains.

 Gold and silver were seen holding support near their current levels.

  The dollar, should it continue to slide, would probably provide support, dealers said.

 They saw some profit-taking in silver, but said there was good support for the metal at $5.15.

  Gold was supported around $385.50, the dealers said.

  Meanwhile, Taiwan yesterday launched round-the-clock gold trading as part of the authorities' efforts to liberalise the Taiwan precious metal market, state-run Central Trust of China (CTC) officials said.

 The CTC officials said the move was aimed at streamlining the market and making Taipei a chief centre in Asia for gold transactions.

 Under the liberalisation, Taiwan gold market could have a round-the-clock trading system to align with transactions in London, Zurich and New York, they said.

 The Taiwan gold market, formerly with an eight-hour trading session, closed around 12 hours earlier than those markets.

 CTC analyst Yang Tien-li said extending the trading time would give a boost to the quiet market in Taipei and mark a big step towards internationalisation, adding that the liberalisation provided more opportunities for Taiwan gold buyers to deal at night and purchase the precious metal at lows.

 The Central Bank of China (CBC) and the Finance Ministry have reached consensus to permit banks to offer 'non-physical' gold, or book-entry business, under which purchases and sales of the bullion are merely recorded on customers' accounts rather than physically received.

 According to statistics compiled by the CBC, Taiwan nationals imported a total of some 50 million ounces, worth US$19.3 billion, from 1975 to 1994, accounting for four per cent of the island's gross national savings.

 The CBC holds another 15.57 million ounces of gold in reserves, worth $5.2 billion.

 Taipei lifted a four-decade-old ban on the import and export of gold in line with the termination of the Period of Communist Rebellion, or state of emergency, in August 1992.



Gold soars as US funds buy heavily