NEW YORK, Jan 12: COMEX gold stalled on Friday amid uncertainty over the outlook for producer hedging, while options expirations and the approach of next week’s UK bullion auction suppressed bullish impulses, dealers said.

We do have the auction coming up Wednesday, said a bullion dealer. Everybody got slapped back to reality.

February gold rose 30 cents to $287.70 an ounce, trading from $285.70 to $288.40, following a $3.70 rise Thursday. Estimated volume was 55,000, comprising 5,358 switches of two contracts each.

This week’s breakout to almost $290 on Thursday came against a backdrop of anticipation that hedge-averse Newmont Mining would win the four-month takeover battle for Australia’s Normandy Mining and buy back Normandy’s 8 million ounces of forward hedge sales.

But South Africa’s AngloGold Ltd. on Friday extended by a week its offer for Australia’s largest gold company.

Whoever wins Normandy will be the world’s largest gold miner and the market is focused on whether the new company will have a pro-hedging philosophy, as does AngloGold.

The market was making room for new supply as the Bank of England prepares to auction 20 tons of bullion Wednesday, the next-to-last sale in a programme begun in 1999 to reduce Britain’s bullion reserves by 58 per cent to 300 tons.

The $290 strike has large enough open interest that I’m pretty sure the shorts on the calls are going to want to keep this lower, said a floor broker.

Call options confer the right to buy gold futures at a preset strike price.

Sellers of calls often try to prevent the underlying futures price from rising and putting the option in the money.—Reuters