London, January 20: Gold weakened in early European precious metals business as dealers took profits and producers sold metal out of Australia to cash in on higher prices, traders said. Spot gold was last quoted at $288.00/$288.50 a troy ounce against Wednesday's New York close at $289.16/$289.75.Asian dealers said bullion fell on Thursday after selling from Australia, apparently by producers seeking to benefit from the metal's gains. In early Europe, fund selling pushed prices further down but gold was well-supported at the $287 level. "Obviously, combined with good physical buying and a lack of hard selling around, gold does have a firmer feel to it. But $290 is a crucial level to break," a dealer said.
Next Tuesday's Bank of England gold auction saw dealers squaring positions ahead of the sale, the fourth in a series aimed at reducing the UK's gold reserves from 715 tonnes to 300. Much of gold's recent strength have been caused by a buyback of forward and options positions by South African miner Randfontein Estates.
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