Friday, September 29, 2006
Thursday, September 28, 2006
But analysts questioned whether gold's jump of $30, or five percent, in a week suggested the metal was on a recovery path after it took a hammering earlier this month.
"I don't think we are in a position to move dramatically higher in the short term. Technically, the market is looking a little bit overdone," said Jeremy East, head of trading at Standard Chartered Bank.
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"It's been a gradual rise. I am not really convinced that we are making new highs this year," he said, adding gold might fall again on any drop in oil prices.
Spot gold
Gold has tracked movements of oil in recent weeks, falling to a near-three-month low of $571.20 in mid-September. Prices spiked to a 26-year high of $730 an ounce in May.
Oil nudged to a seven-day peak just above $63 a barrel, building on the previous day's $2 rise, but later steadied.
Bullion's rise pushed up shares in gold miners in Australia and Hong Kong. Newcrest Mining (NCM.AX: Quote) was up 2.4 percent, Lihir Gold (LHG.AX: Quote) rose 2.14 percent and Lingbao Gold Ltd (3330.HK: Quote) added 1.21 percent.
PHYSICAL BUYING SUFFERS
Physical trade slowed to a trickle as higher prices limited purchases by jewelers, but dealers said seasonal demand from main consumers such as India, China and Japan might help bullion to hold above $600.
"As we set ourselves to enter the fourth quarter, the market will watch closely the physical demand by jewelers, especially in India," Investec Australia in Sydney said in a daily report.
Dealers were awaiting more U.S. economic data to assess whether the Federal Reserve's next move would be to cut interest rates. A final reading for second-quarter growth was due on Thursday and a key inflation report on Friday.
The dollar was off marginally against the euro.
In other metals, silver
Platinum
In industry news, Turkey's first gold-based Exchange Traded Fund (ETF) started trading on the Istanbul Stock Exchange on Thursday, the manager of the fund said.
Gold production at South Africa's South Deep mine is expected to slide by nearly 60 percent year-on-year in the second half following two accidents, half-owner Western Areas Ltd (WARJ.J: Quote) said.
Wednesday, September 27, 2006
Spot gold
Gold rose to its highest level in nearly two weeks to $593.75 in Asia on Tuesday due to higher crude oil prices.
In other precious metals, platinum hit a high of $1,130 an ounce before retreating, while palladium gained on purchases from jewelry makers ahead of the Mid-Autumn festival in China in October, said dealers.
The festive season in main buyer India was also expected to support gold, which fell to a near three-month low of $571.20 on September 15. But dealers were divided over whether the recent rebound would be sustained and help bullion reclaim $600 an ounce.
"I personally think $600 is a possibility. I thought if we are going to touch it, we might have done it yesterday," said Darren Heathcote of Investec Australia in Sydney, who saw gold trading in a $585 to $600 range.
"I think gold is still looking weak. A break of either side at this present juncture is possible, depending on where we see oil prices going in the days and weeks ahead," he said.
U.S. crude oil futures
"Certainly, Indian buyers are adding a little bit of support to the downside and probably stopping it from collapsing at the moment," said Heathcote. "But I am not convinced we are on the upward trend again at the moment."
Gold tumbled to under $600 an ounce for the first time in more than two months on September 11 as falling energy prices sparked heavy selling from investors.
Some dealers said strong demand from jewelry makers as well as the industrial sector would eventually help gold regain $600 an ounce.
"Actual demand for gold, platinum and especially palladium is very strong. But at this moment, the market is mostly influenced by the U.S. interest rate policy and oil price," said Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo.
"There's an active demand for gold, platinum and palladium. By the end of this week, the price will be more than $600," he said.
In the currency market, the dollar trimmed gains made on strong U.S. consumer confidence data which helped to soften expectations the Federal Reserve may cut interest rates.
The dollar fell slightly to 116.95 yen
Dealers await the Fed's favored inflation gauge, the Personal Consumption Expenditure index, due on Friday, to gauge the outlook for rates.
Benchmark gold futures <0#JAU:> on the Tokyo Commodity Exchange rose 11 yen per gram to 2,238 yen ($19.11), reflecting gains in New York's COMEX market.
Silver
Platinum
Tuesday, September 26, 2006
Spot gold
Gold rose to its highest level in nearly two weeks to $593.75 in Asia on Tuesday due to higher crude oil prices.
In other precious metals, platinum hit a high of $1,130 an ounce before retreating, while palladium gained on purchases from jewelry makers ahead of the Mid-Autumn festival in China in October, said dealers.
The festive season in main buyer India was also expected to support gold, which fell to a near three-month low of $571.20 on September 15. But dealers were divided over whether the recent rebound would be sustained and help bullion reclaim $600 an ounce.
"I personally think $600 is a possibility. I thought if we are going to touch it, we might have done it yesterday," said Darren Heathcote of Investec Australia in Sydney, who saw gold trading in a $585 to $600 range.
"I think gold is still looking weak. A break of either side at this present juncture is possible, depending on where we see oil prices going in the days and weeks ahead," he said.
U.S. crude oil futures
"Certainly, Indian buyers are adding a little bit of support to the downside and probably stopping it from collapsing at the moment," said Heathcote. "But I am not convinced we are on the upward trend again at the moment."
Gold tumbled to under $600 an ounce for the first time in more than two months on September 11 as falling energy prices sparked heavy selling from investors.
Some dealers said strong demand from jewelry makers as well as the industrial sector would eventually help gold regain $600 an ounce.
"Actual demand for gold, platinum and especially palladium is very strong. But at this moment, the market is mostly influenced by the U.S. interest rate policy and oil price," said Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo.
"There's an active demand for gold, platinum and palladium. By the end of this week, the price will be more than $600," he said.
In the currency market, the dollar trimmed gains made on strong U.S. consumer confidence data which helped to soften expectations the Federal Reserve may cut interest rates.
The dollar fell slightly to 116.95 yen
Dealers await the Fed's favored inflation gauge, the Personal Consumption Expenditure index, due on Friday, to gauge the outlook for rates.
Benchmark gold futures <0#JAU:> on the Tokyo Commodity Exchange rose 11 yen per gram to 2,238 yen ($19.11), reflecting gains in New York's COMEX market.
Silver
Platinum
Bema said testing at the 650 zone found continuous high-grade mineralization over 625 meters (2,050 feet) with several parallel to sub-parallel veins in zone. High-grade intersections of gold and silver also were found at the site, the company said.
The Vancouver-based miner said its Chukotka Mining and Geological Co., 75 percent owned by Bema and 25 percent owned by the government of Chukotka, has been awarded two new licenses surrounding, and adjacent to Kupol.
The acquisition of the Kupol West and Kupol East licenses increases Chukotka Mining's overall land position in the Kupol area to about 425.5 square kilometers (264.4 square miles) from 17.5 square kilometers (10.9 square miles).
Development and construction of the Kupol Mine continues to progress on schedule, Bema said, with production to begin in mid-2008.
Shares of Bema rose 8 cents to close at $4.42 on the New York Stock Exchange.
Traders remained cautious ahead of the release of key U.S. data this week that could affect the dollar and move bullion prices. Gold's inability to break important price levels also made investors nervous.
"It looks like there is still some profit-taking each time we move closer to $600 an ounce. Should we be able to keep the upside momentum and break the level, then we would see renewed interest from investors and speculative buyers," said Frederic Panizzutti, analyst at MKS Finance.
"On the physical front, gold demand is very sound in various regions. It's still going on and we expect physical demand to remain sound for the coming days," he added.
Gold hit a peak of $593.75 an ounce, its highest in nearly two weeks, and was quoted at $587.00/588.00 by 1232 GMT. That was higher than $586.20/587.20 in New York late on Monday.
"The yellow metal is not out of the woods yet, though, particularly with gold's recent correlation with oil, and remains vulnerable to bouts of fund liquidation," said James Moore, analyst at TheBullionDesk.com.
Oil held above $61 a barrel after rebounding from a six-month low as speculators feared a deepening fall might prompt OPEC to rein in output.
Higher oil prices often elevate gold's appeal as a hedge against inflation. Expectations among investors that the U.S. Federal Reserve will keep interest rates on hold also contributed to Tuesday's rebound in gold, dealers said.
MARKET AWAITS U.S. DATA
The market awaits U.S. data that will help investors to gauge the U.S. interest rate outlook. Consumer confidence data from the Conference Board will be released on Tuesday, while the personal consumption expenditure index -- the Fed's favourite measure of inflation -- would be out later this week.
The euro fell to a 15-month low against sterling and eased against the dollar and the yen.
"We expect the rebound of crude to be short-lived, the long-term downward trend should continue. The economic data today might strengthen the dollar, putting additional pressure on gold," Dresdner Kleinwort said in a daily note.
Dealers kept a watch on gold sales by central banks. The second year of the European Central Banks Gold Agreement ends on Tuesday and some analysts estimated total sales of more than 380 tonnes during the year against the full quota of 500 tonnes.
In other precious metals, silver fell to $11.09/11.16 an ounce from $11.22/11.29 in the U.S. market.
Platinum was down at $1,125/1,130 an ounce from $1,129/1,134, but palladium rose to $314/319 an ounce from $312/317.
In industry news, Russia's gold output in the first eight months of 2006 declined 0.4 percent year-on-year to 101.69 tonnes from 102.10 tonnes, the main industry lobby said.
"There's a bit of a bounce here, but to do something really convincing, it's going to have to break levels like $595 and $600," said commodities analyst Tobin Gorey of Commonwealth Bank of Australia in Sydney.
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"I think the bounce back in oil is helping, but I don't think it's a renewed push on higher oil prices. It's helpful now but it might not be helpful another time," he said.
Spot gold
NYMEX crude
U.S. forecasters are at odds over how cold and snowy the coming winter will be, with predictions ranging from frigid to mild in the key Northeast and Midwest heating regions.
Abundant supplies in top consumer the United States and fears that slower U.S. economic growth would stunt fuel demand had also contributed to crude's fall to as low as $59.52 a barrel on Monday.
Monday, September 25, 2006
"I do feel that the market is still looking for better direction and specifically with respect to gold, it has got two masters it has to follow," David Holmes, director of precious metals sales at Dresdner Kleinwort Investment Bank, said.
"One is the weakening dollar, which is a positive, and the other is the weakening commodities complex, which is a conflicting pressure. I am still curious to know which is going to be the winner," he said.
Gold
Gold came under pressure as oil dropped below $60 a barrel to a six-month low. U.S. crude has fallen nearly $19 from its mid-July peak of $78.40, its biggest slide in 15 years.
A drop in oil prices lower gold's appeal as a hedge against inflation, while a decline in the dollar makes the metal cheaper for holders of other currencies and often lifts bullion demand.
"Gold has seen a mixed start this morning," said James Moore, analyst at TheBulliondesk.com. "Gold remains very much at the mercy of fluctuations in the dollar and the oil market."
The dollar was tightly traded near recent two-week lows against the euro and yen as investors awaited data this week that might fan expectations for the next Federal Reserve move to be an interest rate cut.
In other markets, base metals prices slipped on growing nervousness about falling demand as global economic growth slows.
The Reuters/Jefferies CRB index fell below 300 to a 14-month low as slipping oil prices brought down commodity prices, according to exchange data.
MARKET OUTLOOK
This week brings U.S. housing data, consumer confidence and the Personal Consumption Expenditure index -- the Fed's favorite measure of inflation. Softer-than-expected readings could reinforce expectations, still slim, that the Fed might cut interest rates as early as December.
Lower interest rates are generally seen positive for gold.
"The fourth-quarter fundamentals for gold are positive ... In addition, Societe Generale economists are looking for renewed weakness in the U.S. dollar, which will help to underpin prices, especially if the U.S. housing market slowdown worsens markedly and leads to a flight to quality," Societe Generale said.
"However, we expect prices to weaken through much of 2007 in the face of a growing consensus that the commodities bubble is deflating," it said in a quarterly report.
In other precious metals, silver
In industry news, Russia's Norilsk Nickel
Eighteen of 27 traders, investors and analysts surveyed by Bloomberg News from Sydney to Chicago on Sept. 21 and Sept. 22 advised buying gold, which rose 2.1 percent last week to $595.40 an ounce in New York. Six people said to sell, and three were neutral.
European banks face a deadline of tomorrow to reach their annual gold sales limit of 500 tons, and had shed 380 tons of this year's allotment as of Sept. 19, according to the producer- funded World Gold Council in London. In the week ended Sept. 15, bank sales were the most since June, and gold prices fell the most in two months.
``The market should breathe a sigh of relief with the concerns of any lumpy physical gold sales gone for the time being,'' said Mark Pervan, head of research at Daiwa Securities in Melbourne.
Gold futures for December delivery rose $12.40 an ounce last week on the Comex division of the New York Mercantile Exchange. The gain surprised a majority of analysts surveyed Sept. 14 and Sept. 15, who expected a drop. Bloomberg's survey has forecast the direction of prices accurately in 76 of 126 weeks, or 60 percent of the time.
Sales accelerated in the past month as the deadline neared. The European Central Bank said Sept. 19 that three member banks it didn't identify sold gold worth 499 million euros ($635 million) in the week ended Sept. 15. During that period, gold prices dropped 5.6 percent. The sale was the biggest since banks sold gold worth 3.9 billion euros in the week ended June 30.
Under the Limit
ECB members, under the so-called Central Bank Gold Agreement, sold 497.2 tons in 2005, the first year of a five- year deal. The banks sold 2,000 tons in the five-year period through 2004 as part of their first agreement.
``It's unlikely that central banks will reach the 500-ton limit,'' said Paul Yusem, a Lombard, Illinois-based gold investor. ``For gold sales to be this much under the limit is exceptionally bullish.''
Gold, up 27 percent in the past year, has dropped 19 percent from a 26-year high of $732 an ounce on May 12.
Gold may gain on speculation the U.S. Federal Reserve won't raise interest rates again this year, weakening the dollar. Gold and the dollar often move in opposite directions.
The dollar had the biggest weekly drop since June against the euro last week. The euro has risen 8.2 percent against the U.S. currency this year. The Fed kept its benchmark rate at 5.25 percent for a second straight meeting on Sept. 20, after 17 rate increases since June 2004.
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Weaker Dollar
``The big driver for gold in the short and long term is the collapse in the dollar,'' said James Turk, chairman and founder of GoldMoney.com. ``The Fed will not be raising interest rates for a long time. Gold will therefore continue to climb higher.''
Physical demand also may pick up. Jewelers, who accounted for 73 percent of purchases last year, generally stock up in the fourth quarter for the winter holiday season.
``We don't expect demand to slow down over the coming week since many might buy physical gold before prices shift higher,'' said Frederic Panizzutti, a senior vice president at MKS Finance, one of Switzerland's four bullion refiners.
Gold's gains may be limited should oil prices decline for a fifth straight week. Gold had moved higher with oil this year as some investors sought a hedge against inflation when energy costs climbed.
Oil Tumbles
Crude oil has dropped 21 percent from a record $78.40 a barrel on July 14 amid rising U.S. supplies of gasoline, heating oil and diesel. Prices touched $60 last week after hedge fund Amaranth Advisors LLC said wrong-way bets on natural gas wiped out $6 billion in assets this month.
``The upside is very limited,'' said Alex Mathews, head of research at Kochi, India-based Geojit Financial Services Ltd. ``Crude is the only support at the moment, and gold could fall as a rally in oil is unlikely to last.''
Hedge-fund managers and other large speculators decreased their net-long position in Comex gold futures to the lowest level in more than a year during the week ended Sept. 19, U.S. Commodity Futures Trading Commission data show.
Speculative long positions, or bets prices will rise, outnumbered short positions by 77,868 contracts, the lowest since Aug. 5, 2005, the agency said on Sept. 22. Net-long positions fell by 6,354 contracts, or 7.5 percent, from a week earlier.
Prices tumbled 9.8 percent in the two weeks ended Sept. 19.
Spot gold
Gold opened in Sydney at $587.00/588.00 an ounce.
Dealers cautioned gold appeared at the mercy of crude oil and, coupled with foreign currency movements, there was a possibility of a drop to $550 an ounce if bullion was dip under $580, triggering stop-loss orders.
"There could be some downside momentum building for gold," one said.
Gold hasn't traded below $550 an ounce since mid-June.
Gold was also hurt by figures released in Australia forecasting a 12 percent rise in national gold exports this year amid growing global supplies.
Australia, the world's third biggest gold producing country behind South Africa and the United States, should produce 280 tonnes in fiscal 2007 versus 250 tonnes the previous year, according to the Australian Bureau of Agricultural and Resource Economics.
So far this year, European central bank gold sales are estimated at only around 380 tonnes, which means they still have an allowance of another 120 tonnes before Sept 26 under a multi-year supply-limiting pact.
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The second year of the European Central Banks Gold Agreement (CBGA) came into effect in September 2005.
Central banks and the International Monetary Fund (IMF) collectively hold 30,733 tonnes of gold in their reserves, but have been gradually reducing their holdings.
In March 2004, 15 European central banks renewed a 1999 pact to limit their sales over a five-year period to 2,500 tonnes, with annual sales limited to 500 tonnes.
Spot silver
$11.15/11.22.
A stronger dollar makes commodities costlier for holders of other currencies and often weighs on near-term demand.
Gold also faced downward pressure as crude prices softened.
Dealers cautioned gold appeared at the mercy of crude oil and, coupled with foreign currency movements, there was a possibility of a drop to $550 an ounce if bullion was dip under $580, triggering stop-loss orders.
Oil prices fell on Monday to a new six-month low under $60 a barrel as news of BP restoring output at Prudhoe Bay added to a sense of healthy supplies.
Platinum
Palladium
Saturday, September 23, 2006
On the New York Mercantile Exchange, gold continues to draw direction from the U.S. dollar and fluctuating oil prices.
December gold settled up $7.10 at $595.40 a troy ounce. During the session the contract traded to weekly high of $598 an ounce but faced strong resistance up to the psychologically important $600 level.
"We believe that for the short-term gold remains bounded by the $570-$595 range and will continue to draw direction form the dollar and oil prices," said analysts at MKS Finance in a daily market comment.
The move of the energy portfolio from beleaguered hedge fund Amaranth to JP Morgan Chase & Co. and Citadel Investment Group may have softened the blow of what many market players thought would be a massive liquidation in the energy market that could have stretched into the metals arena, said George Gero of RBC Capital Markets Global Futures.
"The liquidation is not likely to come so traders are covering shorts in (Comex) gold," says Gero.
December silver hit a nearly two-week high of $11.49 an ounce but closed at $11.31 an ounce, up 6.5 cents.
October platinum settled up $8.60 at $1,148.10 an ounce.
December palladium settled up $12.65 at $321.65 an ounce. The contract hit a weekly high of $326.80 an ounce during the session.
December copper settled up 1.20 cents at $3.4435 per pound. During the day session the contract traded as high as $3.4850 _ its best level in two weeks.
Friday, September 22, 2006
Silver tracked gold and rose to a one-week high, while other precious metals also advanced. Dealers noted a drop in physical buying in parts of Asia after hectic buying in the past days at lower price levels.
Spot gold
"The (U.S.) Federal Reserve is keeping interest rates steady and a lot of economic data coming out of the U.S. doesn't look very nice," said Michael Widmer, director of metals at Calyon Corporate and Investment Bank in London.
"It's difficult for the dollar to appreciate strongly and the downward pressure still persists. Also, there are more technical indicators that would actually suggest gold prices rising going forward rather than coming off," he said.
The dollar fell to a two-week low against an index of currencies after a regional Federal Reserve survey showed further signs of a slowdown in the U.S. economy, reinforcing expectations U.S. interest rates will stay on hold.
The Philadelphia Fed's business activity survey for September showed its first negative reading in over three years, indicating a significant decline in manufacturing in the mid-Atlantic region.
A weaker dollar makes gold cheaper for holders of other currencies and often lifts bullion demand. Some investors also turn to commodities from currencies for better returns.
Some dealers said gold was at the mercy of crude oil and movements of the U.S. dollar, and there was a possibility of a drop to $550 if the metal failed to hold above $580.
Oil rose for a second day after a brief mid-week dip below $60 a barrel, as investors bet a six-week slump driven by rising inventories and easing Iran tensions could be coming to an end.
PHYSICAL BUYING DIPS
The physical sector saw a drop in buying in parts of Asia but buyers in India, the world's top gold consumer, were splurging on the metal ahead of the festival buying season as a sharp fall in prices and a promising monsoon had ignited demand.
"While the scale of physical support that has emerged over the past two weeks is encouraging, I still think gold is vulnerable to further bouts of fund and institutional selling," The BullionDesk.com said in a daily note.
Dealers were keeping a close watch on gold selling by central banks.
Europe's central banks have so far sold 380 tonnes against the full quota of 500 tonnes in the second year of an agreement that regulates bullion sales. The year ends on September 26.
In other precious metals, silver
Thursday, September 21, 2006
South African mining group AngloGold Ashanti said on Thursday it has agreed to enter into a 50:50 strategic alliance with the Russian gold and silver producer, OAO Inter-Regional Research and Production Association Polymetal (Polymetal).
In terms of the agreement, AngloGold Ashanti and Polymetal will cooperate in exploration, acquisition and development of gold mining opportunities within the Russian Federation.
"Russia is already one of the world's leading gold producing nations with significant long term growth potential. AngloGold Ashanti therefore identified Russia as a key target for growth early in 2003 and made an investment in the AIM listed gold company Trans-Siberian Gold plc during 200," AngloGold Ashanti said.
Russia's second largest gold producer
"AngloGold Ashanti believes that a partnership with a well established Russian gold producer provides the best platform for further development of its activities in Russia.
"Polymetal, as Russia's second largest gold producer has considerable, proven operating and management expertise and shares AngloGold Ashanti's ambition of expanding its operating footprint in Russia. This will complement AngloGold Ashanti's investment in TSG."
The South African gold miner also announced that it has submitted an offer to the Board of TSG to acquire all of TSG's interests in OOO GRK Amikan (Amikan) and OOO Artel Staratelei Angarskaya Proizvodstvennaya Kompania (AS APK) for a consideration of approximately $40-million and that this offer has been accepted and recommended by the TSG Board.
Amikan holds the comprehensive licence in respect of the Veduga deposit and an exploration licence surrounding Veduga, while AS APK holds the licence for exploration and development of the Bogunay deposit.
Terminating another alliance
"Should the TSG transaction complete, these assets will be contributed to the Strategic Alliance with Polymetal. AngloGold Ashanti has also agreed to extend the term of its existing technical consultancy agreement with TSG for a further two years to 1 July 2009," AngloGold Ashanti said.
"AngloGold Ashanti also announces that it is in the process of terminating the exploration alliance that it has held since March 2005 with Eurasia Mining plc in respect of the Chita and Buryat regions of Russia in order to avoid any conflict of interest that this may pose to the Strategic Alliance with Polymetal."
Commenting on the Strategic Alliance, Bobby Godsell, CEO of AngloGold Ashanti, said: "We are extremely pleased to have entered into this Strategic Alliance with Polymetal and look forward to working together to help achieve our objective of building a meaningful gold business within Russia."
With regard to the TSG Transaction, he said: "We are also delighted that we have reached an agreement with TSG that will provide it with the focus and resources to develop its gold assets in the Kamchatka region of Russia. I am confident that we can work together with the new management structure in order to make this a success."
Gold pared losses on
Thursday after bargain hunters snapped up the precious metal on
price dips, but market players remained nervous about the
outlook for bullion after a recent sell-off.Dealers cited physical demand from jewellers and some Asian
investors but huge trading losses at hedge fund Amaranth
Advisors LCC raised fears of more fund selling in the
commodities markets.Spot gold hit an intraday low of $574.25 an ounce before
reversing and touching a high of $581.50 an ounce.It was quoted at $578.50/579.50 an ounce by 0656 GMT, lower
than $580.10/581.10 late in New York on Wednesday."The market is still under pressure because it hasn't been
able to sustain the gains when it went up to the $585-$586
level," said a dealer in Singapore."We can't rule out that we may go down to $550. But I don't
want to be too bearish since we've managed to hold above $570.
It's range trading at the moment, and if we break $570, the
bears will rejoice," he said.Gold tumbled to its lowest level in nearly three months at
$571.20 an ounce on Friday on fund selling -- a drop of more
than $150 since the metal spiked to a 26-year high of $730 in
mid-May.Key support was pegged around $550 -- a level last seen in
March."Sentiment has been affected by Amaranth. People are afraid
of a spillover effect. The downside risk is there," said the
Singapore dealer.Amaranth Advisors LLC, a Connecticut-based hedge fund that
lost billions of dollars in natural gas trades in recent weeks,
on Wednesday took steps to disband, forging agreements to sell
its energy assets and holding talks to sell other parts of the
business, people familiar with the situation said.Amaranth had more than $9 billion in capital under
management before disclosing this week that its year-to-date
losses may exceed 35 percent because of bad natural gas
positions.The benchmark gold futures contract on the Tokyo Commodity
Exchange, August 2007, hit a three-month low of 2,181 yen per
gram before ending at 2,192 yen. That was 4 yen higher than
Wednesday's close."The trend is still clearly down. Funds are still eager to
unload their positions in gold," said Shuji Sugata, assistant
manager at Mitsubishi Corp Futures and Securities Ltd."Domestic players are particularly cautious about sales by
European central banks. This is having a big psychological
impact," Sugata said.The physical sector showed some activity as bargain
hunters
resurfaced to take advantage of the price drop and weakness in
oil prices.
"There's physical buying. It's quite a good demand as compared
with previously," said Beh Hsia Wah, a dealer at United
Overseas Bank in Singapore, adding purchases emerged around
$570 an ounce.Dealers expected volatile trading, with the currency
markets likely to offer leads."I think we are going to find support around $559 if gold
does dip lower. I don't expect the market to hit $550 soon,"
said another Singapore dealer."In the short term, I see support around $571 and
resistance at $589," he said.The dollar inched down after the Federal Reserve left
interest rates on hold for the second straight time at 5.25
percent and suggested inflation risks were moderating.The dollar dipped to 117.07 yen from 117.45 yen in late
U.S. trade. The euro inched up at $1.2709Silver edged down to $10.90/11.00 an ounce from
$11.02/11.09 an ounce in New York.Platinum fell to its lowest since June 15 to $1,121 an
ounce. It was last quoted at $1,138/1,143 an ounce in New York.Palladium slipped to $303/308 an ounce from $306/311 late
in New York.
Precious Metals Prices by 0702 GMT*
Metal Last Net change Pct Move Gold
578.40 2.10 +0.36
Platinum 1126.00 -12.00 -1.05
Palladium 303.00 -3.00 -0.98
Silver 10.90 0.03 +0.28
Change so far in 2006
Metal Latest bid End prev year Pct Move
Gold 578.40 517.20 +11.83
Platinum 1126.00 968.00 +16.32
Palladium 303.00 254.00 +19.29
Silver 10.90 8.81 +23.72
Wednesday, September 20, 2006
After New York gold futures had closed, the Fed held the benchmark U.S. federal funds rate at 5.25 percent and said any more firming depends on the evolution of the outlook on inflation and economic growth.
Rate hikes often lift the dollar and weigh on gold.
Spot gold dropped to as low as $572.30 an ounce -- not far above a near three-month low of $571.20 an ounce hit on Friday. It was quoted at $580.10/581.10 in New York, against $576.70/8.20 late on Tuesday, when it fell more than 1 percent on fund selling.
A trader in New York said many market players had been surprised by gold's rally at the start of U.S. business.
"I think everyone was expecting gold to trade lower, because copper was down 10 cents and crude oil was down $1 almost when we came in this morning.
"On the opening, someone just pushed it higher and then there was a lot of short covering and that's where the rally came from," he said, adding that a stronger euro in the afternoon also helped prop up the market.
Traders retained a cautious stance, however, predicting the metal was vulnerable to further declines in the days ahead.
"I still see a downside but I don't think it's the start of a bear run. It's just a correction. Certainly metals will recover toward the end of the month," Tony Dobra, a director at Standard Chartered Bank, said.
"We have come down a lot but we are still way above where we started the year," he said, referring to a price level of $517 in early January.
Traders said gold was under pressure due to oil, which slid to fresh six-month lows at $60 a barrel, seemingly removing more investment demand for gold as a hedge against inflation. Prices have retreated from a July record high of $78.40 in the steepest decline for 15 years.
The unwinding of positions linked to billion-dollar losses at a prominent U.S.-based hedge fund, Amaranth Advisors LLC, may also be contributing to the slump in oil prices, and kept some traders fearful of a knock-on effect on precious metals.
"Until this Amaranth thing is cleared up, I still think the pressure could be on the down side, because the institutional people that were thinking about investing in commodities may take a different look here and say, 'Well, look what happens to these hedge funds, these are very significant losses here,'" a New Jersey-based trader said.
Additionally, funds may liquidate more positions in what they consider risky markets as the end of the quarter nears, he added.
"If oil trickles down further, gold can come down again. People are a bit wary about going too long here at the moment, but longer term I am still fairly friendly toward gold," said a precious metals dealer in London.
In other precious metals, silver
Platinum fell to $1,225.50 an ounce, its lowest level since June 20, and was last quoted at $1,138/1,143, against $1,150/1,155. Palladium slipped to $306/311 an ounce from $312.50/317.50 previously.
Gold chopped back and forth today, knocked down by weaker oil prices at one point but later helped by bargain hunting and physical buying.
But traders retained a cautious stance, predicting the metal was vulnerable to further declines in the days ahead. “I still see a downside but I don’t think it’s the start of a bear run. It’s just a correction. Certainly metals will recover towards the end of the month,” Tony Dobra, a director at Standard Chartered Bank, said.
“We have come down a lot but we are still way above where we started the year,” he said, referring to a price level of $517 in early January.
Spot gold dropped to as low as $572,30 an ounce — not far above a near three-month low of $571,20 an ounce hit on Friday — before climbing to $583,00.
It was quoted at $581,10/582,10 by afternoon trade, compared with $576,70/578,20 late in New York yesterday, when it fell more than 1% on fund selling.
Traders said gold was under pressure due to oil, which slid to fresh six-month lows on rising winter fuel stocks and waning concern over Iran. Prices have retreated over $17 from a July record high of $78,40 in the steepest decline for 15 years.
The unwinding of positions linked to billion-dollar losses at a prominent US-based hedge fund, Amaranth Advisors, may also be contributing to the slump in oil prices, traders said.
“If oil trickles down further, gold can come down again. People are a bit wary about going too long here at the moment, but longer term I am still fairly friendly towards gold,” said a precious metals dealer in London. A drop in oil prices reduces gold’s appeal as a hedge against inflation.
In other precious metals, silver fell as low as $10,67 an ounce before jumping to $11,04/11,14, up from $10,80/10,87 in New York.
Platinum fell to $1,225,50 an ounce, its lowest level since June 20, and was last quoted at $1,130/1135, against $1,150/1,155. Palladium slipped to $306/312 an ounce from $312,50/317,50 late in New York.
Spot gold dropped to as low as $572.30 an ounce -- not far above a near three-month low of $571.20 an ounce hit on Friday -- and was quoted at $574.00/574.75 an ounce by 0410 GMT.
That was lower than $576.70/578.20 late in New York on Tuesday, when it had fallen more than 1 percent on fund selling.
"If it starts breaking down to about $560 ... if it breaks down through there, that's probably just another nail in the coffin," said commodities analyst Tobin Gorey of Commonwealth Bank of Australia in Sydney.
"The Thai issue is not going to be enough to outweigh a big drop in oil prices," he said.
The physical sector saw some buying interest in parts of Asia as the price stayed below $580, but there were no signs of safe-haven buying from Thailand, where coup leaders ordered a government, bank and market holiday to help maintain calm.
Thailand's army chief vowed to clean up the country's political landscape and return "power to the people" as soon as possible after ousting Prime Minister Thaksin Shinawatra.
"It's a concern, but in terms of the geopolitical impact and the broader ramifications for the global economy that very high oil prices might have, it's less of a concern," said Gorey, referring to the coup.
Investors in Thailand have moved into gold in recent months because of the poor performance of the country's stock market and political uncertainty, dealers said.
The main Thai stock index <.SETI> has fallen 1.57 percent so far this year.
Gold is mainly used in jewelry and can be bought as a hedge against inflation and for future sales when holders need cash in times of trouble.
Benchmark gold futures <0#jau:> on the Tokyo Commodity Exchange dropped by the daily 60-yen limit to 2,188 yen per gram as weakness in the energy market triggered active selling by Japanese retail investors.
"I was told three months ago that the bull run will be over. I'm just wondering whether this is happening," said one dealer in Singapore. "It looks like the bull run in gold is only a spillover from rallies in base metals markets."
Gold has shed about 20 percent of its value since hitting a 26-year high of $730 an ounce in mid-May, when investors diversified into precious metals as a hedge against international tension and oil-fuelled inflationary concerns.
U.S. crude futures hovered near their lowest level in nearly six months below $62 a barrel, having dropped on Tuesday as analysts forecast another rise in U.S. motor fuel stocks ahead of weekly data from the Energy Information Administration.
The bullion market was likely to turn to currencies for direction ahead of an expected decision by the U.S. Federal Reserve to keep interest rates on hold for a second straight time at a policy meeting later on Wednesday.
"I think they're going to hold rates and then we'll see whether the U.S. economy is slowing down. We see some physical buying from Asia, but I don't know whether it's from Thailand," said a dealer in Hong Kong.
"It seems there's some buying interest below $580," he said.
Tuesday, September 19, 2006
Prices of other precious metals were mixed, with silver recovering after falling earlier, while palladium posted moderate gains.
"It’s very difficult now to be optimistic at least in the very near term. Given the severity of the decline (in the past days), one could normally have expected a little bit more of a bounce but that doesn’t seem to be materialising,” said James Steel, analyst at HSBC Bank, referring to gold.
"I suspect we are moving now into a more neutral phase than anything else. The bears don’t seem to have a lot of conviction either. This is more of a mixed feeling than a bearish outlook.”
Gold hit a high of $588,50 an ounce in Asian trade before falling as low as $580,90. It was last at $581,90/583,40 by late afternoon, against $586,20/587,70 in New York late yesterday, when gold gained more than 1% on firmer oil prices.
Gold has lost about 20% since hitting a 26-year high of $730 in mid-May, when investors poured money into the market as a hedge against geopolitical tensions and inflationary concerns linked to rising oil prices.
“Right now we are in a consolidation phase. The dollar could actually be strong in the short term, which should keep gold stuck in the $550-$620 range, but medium term we see dollar weakness,” said Jon Bergtheil, global metals strategist at JP Morgan.
In other metals, silver fell as low as $10,86 an ounce before rising to $11,11/11,21, still down 1 cent.
Platinum was unchanged at $1,158/1,163 an ounce, while palladium rose to $314/319 an ounce from $307/312 in the US market.
The percentage of traders expecting lower prices this week jumped to 41 percent, the highest level since late July, based on a Bloomberg survey of 32 respondents around the world. A week earlier, the percentage was 24 percent.
Twelve said to buy gold this week, and seven were neutral.
Gold has plunged 20 percent from a 26-year high of $732 an ounce on May 12 as two years of interest-rate increases by the Federal Reserve curbed the pace of U.S. economic growth. The Reuters/Jefferies CRB index of 19 commodities posted its biggest three-week decline in more than 25 years.
Gold futures for December delivery fell $34.30, or 5.6 percent, to $583 an ounce last week on the Comex division of the New York Mercantile Exchange.
The CRB index fell 4.2 percent last week to 307.05, after reaching 304.52, its lowest level in more than a year.
The index has fallen 8.7 percent since Aug. 25 and is down 16 percent from a record reached on May 11, snapping a rally that began in October 2001.
Oil prices, which reached a record $78.40 a barrel in July, fell 4.4 percent last week to $63.33 on the New York Mercantile Exchange amid rising U.S. fuel inventories and signs that consumption would ease.
"The weakness in crude is dragging the metal down," said Suresh Hundia of Hundia Exports in Mumbai, India. "Gold is set for further falls."
Gold's value also is being hurt by the reduced risk of inflation. Prices paid by U.S. consumers rose in August at half the pace of the previous month, supporting the view of the Fed chairman, Ben Bernanke, that inflation would moderate.
Some investors buy gold to preserve purchasing power in times of accelerating inflation. Moderation in inflation "should encourage further selling off in the market," said Ralph Preston at Heritage West Financial, a futures brokerage in San Diego.
Monday, September 18, 2006
"Bullion’s jump this morning has come on the back of bargain hunting, as the market sees value at lower levels following days of declines, said the daily economic comment note from Nedbank Capital.
CPI figures also came out last week from the US hinting at a pause in the country’s interest rates this week and eroding gold’s demand as an inflation hedge, according to the note.
James Moore of TheBullionDesk.com told AFX that gold could test its low levels of a few months back.
"The current theme of long liquidation is likely to see gold continue lower and could look to test the $542,50/oz low from June," he said.
On Wednesday the US Federal Reserve will announce its interest rate decision and today the country’s current account figure for the second quarter is expected.
In afternoon trade, gold was quoted at $581,55/oz from Friday’s close of $579,30/oz. The euro was quoted at $1,2660 from $1,2637 on Wednesday.
Oil prices and dollar strength have pushed the gold price down from just below $640/oz two weeks ago. The oil price has fallen from over $70 a barrel to $63,57 a barrel this afternoon.
Platinum was up $4 at $1,160,50/oz, and palladium was down $1,50 at $309/oz
-- Spot gold was quoted at $580.70/$582.20 an ounce at 0132 GMT, versus $578.30 in New York on Friday, when the metal had tumbled as low as $571.25 an ounce, the cheapest price paid for gold since June 20.
-- "We're seeing gold show some resilience against market forces," a bullion dealer said.
-- Gold opened at $580.60/581.75 an ounce in Sydney.
-- It has lost more than 20 percent since hitting a 26-year high of $730 in mid-May, when investors poured money into the market as a hedge against global tensions, including those over U.S.-Iran relations, high oil prices and dollar instability.
-- The dollar climbed to near five-month highs against a retreating yen as the market brushed aside calls from some in the Group of Seven countries that the Japanese currency should appreciate.
The dollar advanced as far as 118.14 yen,according to Reuters data, up from 117.53 late in New York on Friday and a whisker from recent highs around 118.15.
-- Spot palladium was down $1 at $307/314.00
$308/313.
-- Spot platinum was $3 lower at $1,154/1,162 an ounce.
-- Spot silver gained 18 cents to $10.87/10.93 an ounce.
Sunday, September 17, 2006
The South Deep Mine, about 45 kilometres (28 miles) southwest of Johannesburg, is a coveted acquisition given that many gold pits in the country are reaching the end of their mining life.
"It's a known resource and it is very large," said Mandla Mapondera, gold analyst at Old Mutual Asset Managers.
"There have not been many new gold discoveries in the world in recent years, at least not in terms of sizeable orebodies," he said.
Gold Fields, the world's fourth biggest miner, Monday announced that it had acquired a 50-percent stake in South Deep from Canada's Barrick Gold and also entered into a call and put option to buy the remainder from the Western Areas group, which owns the other 50 percent of South Deep.
"It is a positive move on the basis that it gives Gold Fields access to large reserves and to another mine with very long life," Mapondera said, adding that the company was "very successfully mining right next door" at Kloof.
All this means a fresh loss of face for Gold Fields' rival Harmony, which had managed to acquire a 29-percent stake in Western Areas some months ago.
In May 2005, Harmony failed with a hostile takeover bid for Gold Fields after a seven-month battle characterised by court battles and mud-slinging.
Old Mutual's Mapondera said the key question was whether Harmony had "the capacity to swallow South Deep as a whole? The answer is probably no."
For Harmony boss Bernard Swanepoel, who built up his company group by acquiring ageing gold mines and drastically slashing production costs, it was a bitter pill to swallow.
When asked how he would respond to Gold Fields' option to buy the remainder of Western Areas, he remained cagey, merely indicating that a lot of things could have changed in the few months the offer will take to be finalised.
Gold Fields, which also has mining interests in Ghana, Australia, Venezuela and Peru with an annual production of 4.2 million ounces, plans to develop and deepen its investments and operations.
Four days before the South Deep announcement, Gold Fields said it was investing 4.7 billion rands (500 million euros) in South Africa to deepen exploration at its mines in Kloof and Driefontein near South Deep.
"South Africa remains one of the premier gold mining destinations in the world," Gold Fields chief executive officer Ian Cockerill said.
"These investments will extend our South African profile to at least 2035, strengthening further the solid foundation from which Gold Fields will continue to pursue its existing commitment to international growth."
Since gold was discovered near Johannesburg in 1886, South African mines have accounted for the major share of total global output.
Although the country remains the world's top gold producer, output is dwindling. In 2005, output totalled 297.3 tons, a 13.9-percent decline from a year ago.
Friday, September 15, 2006
Analysts saw prices touching further lows in the short term and trading in a range before resuming an upward path. Gold has shed 10.7 percent in just more than a week.
"This has been quite a shock to a number of people. It's the second big drop this year and it will take time for sentiment to recover," said Stephen Briggs, economist at SG Corporate and Investment Banking.
"The dollar is not declining despite what everybody is expecting, geopolitical tension is much less pronounced than it was and because oil has declined, there is slight disenchantment with commodities," he added.
Spot gold
Gold has lost more than 20 percent since hitting a 26-year high of $730 in mid-May, when investors poured money into the market as a hedge against global tensions, including those over U.S.-Iran relations, high oil prices and dollar instability.
Palladium lost 10 percent earlier, hitting a low of $293 an ounce before recovering to $308/313, versus $325/330 previously.
"Palladium went down as everything else came off. There is nothing in particular behind it," a trader said.
A second dealer said: "This was probably a liquidity issue. We hit a few stops and down we went."
Oil hovered around $63 a barrel, weighed down by bulging natural gas and heating oil inventories in the United States and the suspension of an oil workers' strike in Nigeria.
"People are nervous. They throw gold away because they don't know what's going on. There's a panic liquidation. The next levels that people are looking at are $550, $545 and $530," said a dealer in Singapore.
"But I don't think metal players are that negative. I don't think we are going to hit $500 and below it. That kind of scenario is not present at the moment. People are just frightened by the speed of the fall in prices," he said.
Other precious metals tracked gold, with silver hitting an eight-week low before bouncing back, platinum dropping to a level not seen in three months and palladium tumbling 6 percent.
Silver fell to its lowest level since July 19 at $10.42 an ounce, but it later bounced to $10.72/10.79, against $10.69/10.76 late on Thursday.
Platinum hit a level not seen in nearly three months at $1,138 an ounce before ticking up to $1,157/1,162 an ounce, off from $1,181/1,186.
“Short-term sentiment is building towards the downside,” said James Moore, precious metals analyst at TheBullionDesk.com.
“We have got oil prices in retreat and the dollar has been relatively firm. We have seen an improvement in geopolitical tensions. Investors are looking at the market and thinking there is not really the necessity to hold gold.”
Spot gold fell to $572,10 an ounce in Asia, its lowest since June 23, and was at $576,90/578,40 in early trade, against $576,40/577,90 late in New York on Thursday, when it dropped about 2%.
Gold has lost over 20% since spiking to a 26-year high of $730 in mid-May, when investors poured money into metals as a hedge against global tensions, including those over US-Iran relations, high oil prices and dollar instability.
Oil stayed near $63 a barrel, weighed down by bulging natural gas and heating oil inventories in the United States and the suspension of an oil workers’ strike in Nigeria.
Weaker oil prices undercut gold’s appeal as a hedge against inflation. The metal also moves in the opposite direction of the dollar.
"It looks like the good time has stopped. The momentum is weak enough that people start selling. $543-$544 are key levels to watch,” said Tobin Gorey, a commodities analyst of Commonwealth Bank of Australia in Sydney.
Mining shares fell in Australia. Newcrest Mining lost 1,33%, gold and copper miner Oxiana dropped 2,2% and Lihir Gold slipped 3,3%.
Gold’s 14-day relative strength index (RSI) stood at 20,18 on Thursday, down from 24,46 on Monday. The market views an RSI of 30 or less as oversold and 70 or more as overbought.
In other precious metals, silver fell to its lowest level since July 19 at $10,60 an ounce in Asia, but later rose to $10,75/10,82, against $10,69/10,76 in New York.
Platinum hit a level not seen in nearly three months at $1,161 an ounce before rebounding to $1,164/1,169 an ounce, still down sharply from $1,181/1,186 late in the US market.
Stillwater Mining, the only US producer of palladium and platinum, said employees at its East Boulder Mine in Montana will return to work on Friday following closure of the facility from Wednesday evening through Thursday due to a wildfire.
Thursday, September 14, 2006
``People are selling rallies now,'' said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. ``There are still some longs that have been trapped. The trade now is to sell gold and get short of this stuff.''
Gold has tumbled more than $50 in the past week as declining oil prices fueled speculation demand for raw materials may be easing. The Reuters-Jefferies CRB Index of 19 commodities touched the lowest since July 2005. Gold is down 20 percent from a 26-year high of $732 an ounce reached on May 12.
Gold futures for December delivery fell $10.30, or 1.7 percent, to $586 an ounce on the Comex division of the New York Mercantile Exchange, the lowest closing price since June 28. Prices earlier traded as high as $601.80. Today's decline was the sixth in seven sessions.
A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
Losses accelerated after gold fell below the 200-day moving average, a signal to traders who look at historical charts that prices are poised to fall.
``You have a flip in the market from net long to net short,'' said Michael Guido, director of hedge fund marketing at Societe Generale in New York. ``Speculators are starting to short the market.''
Oil Declines
A decline in oil helped send gold lower. Oil futures touched $63.15 today, the lowest since March 23. Prices are down 2.9 percent from a year ago after reaching a record high of $78.40 on July 14.
Gold and oil have generally moved in lockstep as investors buy the metal as a hedge against inflation when energy expenses climb. Oil erased earlier gains after the Energy Department said inventories are 11.7 percent higher than the five-year average.
``Crude has to do better than this to pull the metals up,'' Lesh of FuturePath said.
Gold may drop to $575 before rebounding, said Guido, of Societe Generale.
``The intention is to buy the market but investors want to see how low it can get,'' Guido said.
The lowest prices in more than two months may attract some buyers, analysts said. Gold may rise to $700 an ounce by the end of this year, GFMS Ltd., an independent London-based precious metals research company, said in a report today.
Net purchases of gold for investment totaled 165 tons in the first half, compared with net sales of 38 tons a year earlier, GFMS said. Jewelry demand, the biggest use for the metal, fell 28 percent to 1,069 tons. ``The worst of the decline may be over,'' said GFMS Executive Chairman Philip Klapwijk at a London conference today.
``I'm looking for a bounce from bargain hunters,'' said Leonard Kaplan, president of Prospector Asset Management. Lower prices have lured some of his clients back to the market, he said.
Gold Fields Mineral Services (GFMS), the London based precious metals consultancy, says the gold price could break through the $700 per troy ounce mark in the last quarter of 2006 on the back of higher demand from investors.
"Investor buying over the last quarter of 2006 could drive the gold price back through the $700-mark," said GFMS chairperson Philip Klapwijk, in the release of the group's updated Gold Survey 2006.
The group says its forecast is based on a number of factors including a bleak outlook for the US economy and therefore the dollar, Middle East tensions remaining extremely volatile and the continued threat of global terrorism.
Global slowdown 'bad news'
"All the above make gold's safe haven properties particularly attractive," says the release.
On the downside, GFMS indicates that a global economic slowdown could have an adverse effect on gold investment.
"Such a development is expected to hurt the overall commodities complex, triggering liquidations in gold."
Over the past week and a half the gold price has fallen from levels above $630/oz to below $580/oz on Thursday.
GFMS addresses this issue saying that gold is expected to suffer some losses but that a "full blown exit by investors" will not occur.
"...the problematic nature of the world economy and particularly in the United States, is expected in time to boost gold's attraction as a safe haven asset and probably outweigh the negative impact of the bursting of the wider commodity bubble."
Wednesday, September 13, 2006
December gold rose $2 to settle at $596.30 a troy ounce on the Comex division of the New York Mercantile Exchange, while December silver added 6 cents to $11.20 an ounce.
The gold futures bounced from technical support near $586, said Dave Meger, senior metals analyst with Alaron Trading. Specifically, the low hit in the overnight session was $585.60.
"The dollar was slightly weaker on the day, although minimally, but at least allowing that (uptick in metals)," said Meger. "And then the general commodities trend of being down (lately) maybe subsided today, with crude-oil prices being up. There was certainly a benefit from that."
October platinum settled down $22.70 at $1,185.80 an ounce. December palladium settled up $6.25 at $318.35 an ounce.
"At the moment the short-term proposition is to sell the rallies rather than buy the dips," David Gornall, head of forex and bullion at Natexis Commodity Markets, said.
"The move lower was been sparked by oil, compounded technical selling, but going forward the market hasn't quite broken down. I don't think we will see the end of the bull cycle until gold breaks convincing below $540."
Spot gold fell as low as $578.60 an ounce before rising to $587.70/589.20 by 1443 GMT, compared with $587.80/589.30 an ounce late in New York on Tuesday.
Gold has fallen nearly 10 percent in a week from its high of $640.25 an ounce because of heavy selling by funds, triggered by falling oil prices and firmer dollar.
Oil was trading just below $64 a barrel, after eight days of price falls which have sent crude to its lowest in almost six months after Iran sounded a softer note on its nuclear plan, OPEC agreed to keep supplies steady and BP raised hope for a quicker resumption of Alaskan supplies.
"With the break that we have seen, things are fairly gloomy. Given that we started September on such a positive footing, it's very disappointing to see gold trading at these price levels," said David Holmes, director of precious metals sales at Dresdner Kleinwort.
"With the weakening of the oil price and base metals prices, a lot of the euphoria that was in the market is evaporating. I think we could still be in a correction phase."
GOLD VULNERABLE
"As long as gold remains below $597-$600 area, it's looking more likely that it will want to head down and test $575, and possibly after that the $550 level," said Darren Heathcote of Investec Australia in Sydney.
"I can only imagine that as a result of this move, a lot of investors have become very nervous and they are very happy to take a defensive stance and stay in cash," he said.
In other precious metals, silver was at $11.07/11.14 an ounce after falling as low as $10.87, versus $10.98/11.05 late in New York on Tuesday.
Platinum fell to $1,175 an ounce before bouncing higher to $1,185/1,190, versus $1,200/1,205 in the U.S. market. Palladium
was at $310/314 from $318/322.
"Platinum is trying to recover, but it keeps falling away. Fundamentally platinum and palladium look good and we should finish the year positively," Gornall of Natexis said.
Tuesday, September 12, 2006
At 12.36 pm, spot gold, which earlier hit a high of 599.40 usd, was quoted at 596.25 usd, up from 590.25 usd at the time of the COMEX market close in New York yesterday. Other precious metals were also higher.
Spot silver was at 11.32 usd an ounce against 11.07 usd yesterday, platinum was at 1,209.50 usd against 1,191.00 usd, while palladium was at 319.50 usd against 312.00 usd.
Gold came under heavy pressure yesterday, falling below 600 usd for the first time since June 30 as concerns over Iran's nuclear drive receded, sending oil prices to their lowest levels in more than five months.
Oil prices have recovered slightly today, with US crude trading above 65 usd, and this, coupled with bargain hunting and physical buying, has taken gold higher.
Further, weakness in the dollar ahead of today's US trade data, which is expected to reveal a widening in the July trade gap, is also supporting bullion.
Gold often moves counter to the dollar because it is seen as an alternative investment to the US currency, and bullion dealers also buy the metal as a hedge against inflation.
'Bulls in the market should take heart from the healthy physical demand which has come to the market over the last couple of days, as the Indian community look to take advantage of weaker prices ahead of the forthcoming Diwali festival and Indian wedding season,' Standard Bank said.
It added that 'this, coupled with caution about the dollar's upside potential being limited by US trade data ... may provide gold bulls with an interesting buying opportunity'.
Monday, September 11, 2006
Metals miner Hecla Mining Co. on Monday said it expects to raise its silver resource base by roughly 29 million ounces this year due to discoveries at an Idaho mine and another in Mexico.
The company said it expects to add about 25 million ounces of silver to its resource trove at its Lucky Friday mine in northern Idaho, bringing the reserve and resource base there to 115 million ounces of silver, plus lead and zinc by products. Hecla plans to double the silver resource base of its San Sebastian property in central Mexico to 8 million ounces.
A "resource" means a property has fewer drill holes than what is necessary to classify the discovery as a "reserve" and represents a lower confidence level than the reserve base. The Securities and Exchange Commission requires mining companies to report resources and reserves according to that definition, according to a Hecla spokeswoman.
"The entire resource increase is located in North America and is largely a result of new exploration programs on existing properties, as opposed to an acquisition of existing resources," said President and Chief Executive Phillips S. Baker Jr.
Silver has enjoyed a rally in 2006, along with the broader commodities market. The price of silver on the New York Mercantile Exchange has risen about 39 percent since the start of the year. The metal fell 41.5 cents to $11.88 an ounce in morning trading on the Nymex.
Hecla said it calculated the increased resources using the below-market price of 8.00 per ounce of silver.
Hecla shares fell 53 cents, or 8.8 percent, to $5.50 in midday trading on the New York Stock Exchange. The stock has moved between $2.95 and $7.09 over the past year.
Gold for immediate delivery fell as much as $11.60, or 1.9 percent, to $599.20 an ounce, its lowest since June 30. It traded at $599.88 at 12:39 p.m. Sydney time.
Some investors buy gold as a hedge against rising inflation, and as a haven asset that retains its value better than other securities, such as stocks, during times of geopolitical tension.
Oil prices have fallen 16 percent since touching a record $78.40 a barrel on July 14, while gold prices have declined 9.7 percent over the same period.
Gold for delivery in December fell as much as $11.50, or 1.9 percent, to $605.80 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange. It traded at $606.80 at 12:44 p.m. Sydney time.
`The Way Down'
``People were playing gold up in the past two months on the basis of oil, and now it's on the way down,'' said Daiwa's Pervan. ``You could also see some momentum selling from here.''
Some investors are also selling spot gold after it fell below a so-called support level of $604 indicated in charts used by traders, triggering orders to sell to curb losses. A support level is identified by clusters of ``buy'' orders and, when it's breached, traders often switch tack, selling the security to limit losses.
Gold had been expected to rise this week on demand from jewelers, who need to stock up ahead of a projected rise in sales during India's wedding season and holiday festivals, which begin next month.
Eighteen of 34 traders, investors and analysts from Sydney to Chicago surveyed by Bloomberg News on Sept. 7 and Sept. 8 advised buying gold. Eight respondents said sell, and eight were neutral on the precious metal.
Saturday, September 09, 2006
Not many people think of investment in silver. Even though silver has never been as highly valued as gold in dollar terms, it has the potential to be a lot more profitable than gold in future.
There is a hidden link between gold and silver which, according to an article in a local daily, should cause silver prices to soar more than gold in the next few years.
According to the American Geological Institute, despite fluctuations, gold prices have historically been around 16 times the price of silver because gold is roughly 16 times rarer than silver inside the Earth's crust, That's why almost every major world government in history set the value of silver at 1/16th the price of gold.
Based on this value, if gold costs $650, silver should cost around $41. But it doesn't. Today if silver costs only $11 an ounce that means right now, silver is historically undervalued by close to 300 per cent. Right now, gold sells at a price 50 to 60 times higher than silver.
In the 19th and 20th centuries, major world governments stopped using silver as money. And even though the white metal remained just as precious, people didn't see it as a "valuable" investment anymore.
Many experts believe that under certain market conditions, silver prices rise faster than gold's until silver reaches its historical value of 1/16th the price of gold. Because it happens almost every time inflation is high people's faith in the dollar is low, and there's a war or crisis going on. Watch the pattern. If it happens once, you could dismiss it. If it happens three or four times during 100 years of trading, it's a powerful pattern:
168 per cent returns during World War I: In 1914, at the beginning of World War I, silver cost 1/41 the price of gold. By 1919, it was worth 1/15th. And smart investors made 168 per cent on silver in just 5 years.
488 per cent returns during World War II: In 1941, when World War II was ripping the world apart, silver was at 1/96 the price of gold. By 1967, it was worth 1/16th. And silver investors made a whopping 488 per cent.
433 per cent returns during the 70s oil crisis: In 1975, during America's biggest oil crisis, silver cost 1/40th the price of gold. By 1979, it was worth 1/14th. Again, silver investors made 433 per cent in only 4 years.
All the above time periods had one thing in common: Investors didn't trust paper money. They bought gold and silver to protect and grow their wealth.
That's what's happening right now. As the 'war on terror' and Iran crisis goes on and as inflation plagues America, silver is the best way to profit. It's still selling at 1/50th the price of gold, and has a lot of catching up to do. As the Wall Street Journal reports, "Silver's recent rise means it could scale new heights."
Catching up to gold prices is just the beginning. That could give you a nice 300 per cent gain for starters — but the potential for silver as an investment over the next few years is even more astounding.
Right now, Americans are uneasy about paper money — because the dollar isn't buying as much as it used to. Oil, gas, and food prices have all gone up — without much increase in income levels.
And since the dollar has become the global currency for trade, any effect on the dollar will be felt in precious metals too.
In short, people are losing faith in the dollar. That's what happens in times of inflation. Investors distrust paper money and anything based on it such as stocks and bonds. They turn instead to hard assets like land, precious metals, and oil. Right now, investors are finding comfort in gold, and for good reason.
"Rising inflation and continued negative real interest rates make a good environment for precious metals," Barron's reports.
Bill Murphy, Chairman of GATA, the international watchdog organisation monitoring gold markets, says, "Gold should top $1,000 within two years on its way between $3,000 and $5,000." One of Europe's largest equity brokerages, Cheuvreux, says "We could see the gold price spike up much further, possibly to $2,000 an ounce or even higher."
Sure, gold has dipped since its $730 high point in May. But a few corrections are bound to happen along the way. Before gold hit its peak during the last precious metals bull market between 1974 and 1980, it went up and down several times.
Even if gold reaches the lower estimate of $2,000, investors could make up to 200 per cent returns, based on gold's current price of $650. But silver could get five times higher returns. During the last silver boom, some Americans made 1,585 per cent. Every time gold prices soar, silver prices soar about twice as high.
During the last precious metals bull market, gold went from $35.12 to $306.68 — a respectable 773 per cent. But silver shot up from $1.29 to $21.793 during the same period — an incredible 1,585 per cent.
Silver was already up 114 per cent in the past 12 months. Gold, on the other hand, is only up 70 per cent. It's taking fewer and fewer ounces of silver to buy one ounce of gold. Silver could likely continue to become more and more precious until it hits 1/16th the price of gold — its historical value.
If one keeps the low estimate of gold at $2,000 — silver's reversion to its historical value could cause it to spike from $11 to $125.This means: One can end up making enormous profits, even if the price of silver does only half that well, one should easily double or triple your money.
Most invest in silver by purchasing silver bars or coins. This isn't a bad idea — but if one worries about the hassles of shipping, storage, and insurance, then he should buy silver mining stocks. Or buy silver exchange traded funds — where the price of the fund is tied directly to price of silver.
Friday, September 08, 2006
The mine's majority stakeholder, Allstate, was seeking to sell its 51 per cent stake to a third party.
But the court has ruled that joint owner Beaconsfield Gold must be allowed to match any offer to buy Allstate's shares.
Beaconsfield Gold chief executive Bill Colvin says it is a sensible way forward for the mine to be controlled by one owner.
"We believe that the mine would be better served under single ownership, so one company running the mine," he said.
"We believe that we're well-placed to do that.
"We have shareholder approval to run the money, we've been in the joint venture for some time - we understand the asset well."
He says it is hoped the mine will begin producing gold again later this year.
"That may happen as early as October in a limited way as a prelude to the full recommencement of normal mining activities," he said.
The accord, expected to be announced imminently, will involve Kinross taking a stake of less than 10 percent in Verena Minerals' capital, the source said said on Wednesday.
It will also team up with Verena on a gold exploration project in Tapajos, in Brazil's northern state of Para, he said.
The project at Tapajos, a former wildcat (garimpeiro) gold mining area, is "at a preliminary stage," according to the source.
The new link-up represents an expansion of existing joint activities between the two Canadian gold miners.
In September 2005 Kinross and Verena signed an accord on joint venture development of Monte do Carmo, a gold-bearing area in Brazil's Tocantins state, where Verena holds prospecting rights.
So far Kinross has invested $8 million in mineral exploration at the Tocantins site, according to the source.
Thursday, September 07, 2006
Gold and silver generally move in the opposite direction of the dollar, which reached a three-week high against a basket of six major currencies today. Gold has gained 20 percent this year and silver has jumped 43 percent, while the dollar has lost 7 percent against the euro.
``Dollar strength is hurting the metals,'' said Frank McGhee, head metals trader at Integrated Brokerage Services in Chicago. ``Every fund is hitting the door at the same time.''
Gold futures for December delivery fell $16.90, or 2.6 percent, to $624.90 an ounce on the Comex division of the New York Mercantile Exchange, marking the biggest percentage drop since July 18. Prices still are up 39 percent from year ago.
Silver for December delivery dropped 50.5 cents, or 3.8 percent, to $12.695 an ounce. Prices reached $13.37 on Sept. 5, the highest since May 17. The metal still has surged 78 percent in the past year.
A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
The dollar index strengthened on speculation U.S. interest rates will remain higher than those in Japan and Europe. A key U.S. rate is 5.25 percent, and the European Central Bank's is 3 percent. The Bank of Japan will probably leave its benchmark interest rate unchanged at 0.25 percent at a two-day meeting starting today, a Bloomberg survey of economists showed.
The South Africa-based gold miner said the move will help them access an additional 10.8 million ounces of gold below the current infrastructure of the two mines.
The deepening of the Driefontein mine will produce an additional 8.8 million ounces of reserves and extending its life about 13 years to 2035. Changes to the Kloof site will let the company mine an additional 2 million ounces of reserves and will add incremental gold production from 2011 to 2021, Gold Fields said.
The company will fund the projects internally.
Wednesday, September 06, 2006
The seven-day relative strength index of the precious metal rose to 70 yesterday, a signal the metal may drop. Gold has gained 1.7 percent over the past two weeks and jumped the most in eight weeks in New York yesterday.
``It is a little overbought,'' said David Gornall, head of foreign exchange and bullion at Natexis Commodity Markets Ltd. in London. ``Gold gained quite a bit yesterday.''
Bullion for immediate delivery fell $1.15, or 0.2 percent, to $637.15 an ounce as of 10:43 a.m. in London. Gold futures for delivery in December on the Comex division of the New York Mercantile Exchange dropped $2.20, or 0.3 percent, to $644.70 an ounce.
Speculation central banks may accelerate sales of gold from their reserves may add to the metal's decline. Under an accord known as the Washington Agreement, European central banks can sell up to 500 tons of gold by Sept. 26 this year. They have sold 340 tons so far.
``People are watching closely'' to see central banks are selling,'' said Matthew Turner, an analyst at Virtual Metals Consulting in London. ``Over the medium term, we expect gold to trade a little lower.''
Among other precious metals, palladium fell $4, or 1.1 percent, to $348 an ounce, and platinum dropped $3, or 0.2 percent, to $1,266.50 an ounce. Silver rose 5 cents, or 0.4 percent, to $13.01 an ounce.
Tuesday, September 05, 2006
Though floor traders were still trying to get their bearings after Monday's U.S. Labor Day holiday, there was some speculation that metals were benefiting as investors grew more sour on crude oil after recent declines in the price.
"I'm thinking there is some money coming out of the energies and coming into metals," said a floor broker. "We saw some fund buying earlier last week. We continue to see a little bit of buying here this morning."
Silver took a leading role overnight, but gold sprinted ahead at the open on the COMEX division of the New York Mercantile Exchange.
December gold at 9:38 a.m. EDT (1338 GMT), was up $12.10, or 1.9 percent, at $644.70 an ounce, trading to a 25-day high at $646.50 from $631.60, the bottom overnight.
Another broker said the floor considered $649 an ounce the next resistance point for the benchmark contract.
Spot gold fetched $636.00/80, up from $624.85/625.85 an ounce when trading wrapped up Friday afternoon. Tuesday's morning fix in London was $629.75.
"It is quite a sharp jump when you consider oil is well entrenched below $70 and the U.S. dollar at $1.28 against euro is relatively strong," said Bernard Hunter, a director of precious metals trading at ScotiaMocatta in Toronto. "Gold's reaction is probably breaking away from those traditional indicators."
hough the dollar was firmer at $1.2810/12 per euro, it was off against the yen, which makes gold a cheaper buy for Japanese investors. December silver
"The summer holidays are over," noted Hunter. "People are now laying in positions for the remainder of the year."
Silver has outperformed gold in recent weeks, rising about 39 percent in value since mid-June. Gold has climbed around 16 percent in the same period.
Traders cited positive technical factors for silver compared with gold and good demand for a silver exchange-traded fund that launched on the American Stock Exchange in late April, said analysts.
One of the brokers said he expected December silver to reach $13.50 by the end of the week.
Spot silver climbed to $13.14/13.21 from $12.89/12.96 an ounce late Friday. Bullion dealers fixed Tuesday's spot reference rate at $13.15.
In platinum, NYMEX October futures were up $23.10 at $1,277.90 an ounce. Spot platinum was quoted at $1,264/1,268.
December palladium was up $4.40 at $349.60 an ounce. Spot was quoted at $348/353.
Monday, September 04, 2006
``We are starting to see not just seasonal buying coming back into the market, but also investors coming back,'' said Jim Lennon, a London-based analyst at Macquarie Bank Ltd. ``We see prices pushing higher.''
Gold has gained every September since 2000 as jewelers buy the metal for the winter holidays, the Indian wedding season and as investors in Europe and U.S. return to work after mid-year breaks. Eighteen of 28 traders, investors and analysts surveyed by Bloomberg on Aug. 31 and Sept. 1 advised buying gold. The results were the most bullish in seven weeks.
Gold for immediate delivery gained $1.74, or 0.3 percent, to $627.20 an ounce at 4:03 p.m. in London. Gold futures didn't trade on the Comex division of the New York Mercantile Exchange today because of the Labor Day holiday.
Jewelers are the biggest buyers of the metal, which has fallen only nine times over the month of September since gold began trading on public exchanges in 1975.
``It's around this time of the year when you expect physical demand to pick up,'' Darren Heathcote, head of trading at Investec Australia, said in an interview from Sydney.
Still, Lennon said investors have a more significant part to play. Gold rose to a 26-year high of $732 an ounce on May 12 as investors poured money into precious metals and other commodities.
``Investors drive 90 percent of the moves,'' said Lennon.
Investor Demand
Pension and hedge funds will put about $100 billion into commodity indexes and related products by the end of 2006, compared with $10 billion at the end of 2003, according to HSBC Holdings Plc.
Silver was up 10 cents, or 0.8 percent, at $13.05 at 4:04 p.m. in London. Investment in Barclays Plc.'s exchange-traded fund, or ETF, for silver rose more than six-fold to 3,121 tons as of Sept. 1, from 653 tons when it was listed on April 28.
``With the strong demand for the ETF, silver should head back to $14, $15,'' said David Gornall, head of bullion and foreign exchange at Natexis Commodity Markets in London.
Among other precious metals, palladium were little changed at $344.25 and platinum rose $3.50, or 0.3 percent, to $1,249 an ounce respectively.
But output dipped 6.4 percent when compared with the same quarter in 2005, the industry group added in a statement.
Mining firms milled 8.5 percent more ore in the second quarter compared with the first quarter, but the average grade dropped by 7.5 percent to 4.59 grams per tonne.
The sector, which had been struggling for three years as a strong rand cut export earnings of dollar-denominated gold, has benefited this year from a combination of higher metals prices and a weaker local currency.
But the knock-on effects of restructuring and closures of loss-making mines have still had an impact this year.
The dollar gold price jumped by 38 percent to an average of $591 per ounce in the quarter versus the same period last year, while the domestic gold price shot up by 47.5 percent to 129,789 rand per kg, the chamber said.
The number of mines that were in the red or close to making losses fell from nine accounting for 48.2 percent of production in the second quarter of 2005 to four mines with only 10.1 percent of output this year.
"From an average gross loss before capital expenditure in the second quarter of 2005 the industry was able to fully cover capital expenditure and be in the black a year later," it added.
South Africa's three biggest gold producers accounting for the bulk of output are AngloGold Ashanti Ltd, Gold Fields Ltd and Harmony Gold Mining Company Ltd.
Sunday, September 03, 2006
Australia's annual gold production fell five per cent last financial year, according to a new research report.
Gold production was 251 tonnes in 2005/06, from the previous year, according to the latest quarterly report on the Australian gold mining industry by Melbourne-based consultants Surbiton Associates.
The full financial year output was almost 15 tonnes or some five per cent less than production in 2004/05.
Surbiton attributed the lower result to rain-affected March 2006 quarter and subdued output in the June quarter.
In the second quarter, gold production totalled 61 tonnes, just half a tonne more than the previous quarter.
"Australia's gold output barely rose in the June quarter despite the better weather," said Surbiton managing director Dr Sandra Close.
"Production at several larger operations declined but this was offset by initial output from Barrick Gold's Cowal operation in NSW and better performances from AngloGold Ashanti's Sunrise Dam mine and Newcrest's Telfer operation."
Telfer produced 184,415 ounces in the June quarter displacing the Super Pit as Australia's largest gold mine.
Output at the Super Pit, owned by Barrick Gold and Newmont Mining, fell 12,000 ounces to 164,000 ounces due to a 10-day maintenance shutdown.
The top five gold Australian gold producing operations for the year were Super Pit with 700,000 ounces, Telfer with 650,016 ounces, Kanowna/Paddington with 514,651 ounces, St Ives/Lefroy with 496,408 ounces and Granites with 417,800 ounces.
Although overall gold output from established mines is little changed, several new companies and new operations are joining the list of producers, Surbiton said.
"The higher gold price, with a local record of A$933 per ounce on 12 May, has encouraged some of the junior explorers to get into production as soon as possible," Dr Close said.
"While some of the projects are only small, with the ore being sent for toll treatment, others are more substantial."
Dr Close said the smaller companies that are toll treating their ore are mostly located near Kalgoorlie in Western Australia.
Avoca Resources, Barra Resources, Kalgoorlie-Boulder Resources, Ramelius Resources and Reed Resources have all recently poured first gold, or are about to do so, according to the consultancy.
It also said Range Resources Ltd has poured the first gold at its Indee operation, as has Tanami Gold NL at Tanami, both of which are new operations.
Companies bringing old operations back into production include Gleneagle Gold, Renison Consolidated Mines and Haoma Mining.
"Completely new gold projects are thin on the ground, especially big ones," Dr Close said.
