LONDON, Oct 23: Gold bullion prices struggled on Tuesday in Europe, falling below $275.00 an ounce as the market traded in quiet conditions coming under pressure from a strong dollar and ongoing liquidation.

Gold opened lower in Europe following a sell-off in New York, which prompted spot bullion to slip just below key support at $275.00 an ounce. Traders said prices remained vulnerable to the downside as the market continued to shed its safe-haven status on the back of ongoing speculative selling.

Gold has started to trade in a new $272.00/277.00 range, but prices the risk is to the downside of this range, an analyst said.

Spot gold was last quoted at $274.90/275.40 an ounce, a shade up on $275.00/275.60 at the close of business in New York on Monday.

Traders said, gold’s failure to rally on the back of anthrax scares and poor economic conditions was a strong indication that gold’s safe-haven premium had all but run its course.

Gold has lost its ability to provide a safe-haven in times of uncertainty...people simply do not want to buy gold anymore, a trader said.

Gold’s poor performance can in part be attributed to the London Metal Exchange’s (LME) annual dinner week, which got into swing on Monday. Many traders have diverted their attention from movements in the precious to base metals.

All the excitement in the gold market has been replaced by alcohol in the LME week, one trader said.

Some traders said despite gold’s apparent immunity to the threat of anthrax it was finding some support on the back of this on the way down, but added that they could not rule out falls to around $272.00 an ounce by the end of the week.

$272.00 or even lower is definitely achievable if not today, by the end of the week. Hopefully if it gets down to these levels then some interest may come back into the market, but for now the demand is simply not there, the trader said.

Silver edged lower during the morning, with the metal’s own weak fundamentals and gold’s steady slide down doing little to help prices.

HONG KONG GOLD: Hong Kong gold prices closed lower on Tuesday at US$272.25-272.75 an ounce, against the previous day’s closing rate of 278.20-278.70.—Reuters/AFP