LITTLE REACTION TO REMOVAL COMEX DAILY LIMITS
The elimination of limits on daily price
fluctuations for metals futures contracts traded on the
Commodity Exchange, COMEX, appears to be having little effect
on the market, analysts said.
    "There is nothing apparent from the change," said William
O'Neill, director of futures research at Elders Futures Inc.
    "The market has not approached the old price limits and
trading is relative quiet, in narrow ranges," he said.
    On May 5, COMEX eliminated price limits on the two
contracts following each spot delivery in gold, silver, copper
and aluminum futures after a review of its clearing operations,
which were severely tested by a volatile market in silver
futures at the end of April. COMEX announced Friday the lifting
of all daily limits, effective today.
    Gold futures, which previously had a limit of 25 dlrs per
ounce in most back months, were about 7.00 dlrs weaker in the
nearby contracts amid thin volume conditions, traders said.
    Silver futures, previously limited at 50 cents in most back
months, were trading about 30-40 cts weaker in the nearby
contracts amid quiet trading today.
    During the last week of April, silver futures often traded
at the daily allowable limit amid concerns about inflation, the
dollar, and other factors. Traders rushed into the spot, or
unlimited, contract to offset those moves, analysts said.
    As a result, O'Neill said, there was much confusion, many
unmatched trades, and large losses for some traders.
    The COMEX fined four large firms a total of 100,000 dlrs
for failure to resolve unmatched trades in a timely manner.
    Paul Cain, a vice president at Shearson Lehman Brothers,
said the elimination of price limits will cut back on panic
buying or selling and contribute to more orderly markets.
    O'Neill added that the elimination of daily limits would
add caution to trading.
    "This is a more realistic approach because the metals
market is a 24 hours market and prices can move without limit,"
O'Neill said.
 Reuter
