old futures closed at their highest level since June 7, in a broad metals rally triggered by the tumbling dollar. The metal gained 4% in the second quarter.
Gold for August delivery ended the session up $27.10 at $616 an ounce on the New York Mercantile Exchange, an increase of 4.8% for the week. Gold hasn't closed above $600 since June 12.
Other metals prices also posted gains. Silver added 50 cents to $10.833 an ounce, platinum rose $41 to $1,246.70 an ounce and palladium was up $10.10 at $323.50 an ounce. Copper rose 3.9 cents to $3.4625 a pound.
"We're at a peak of interest rates," said John Clemmow of Investec Securities. "Gold is extremely interest rate-sensitive and dollar-sensitive. The real level of interest rates is set to go softer and gold has more upside than downside in this case."
he move through $600 in Comex Aug gold, after an FOMC statement Thursday that was less hawkish than some feared, has propelled further buying, says Mike Zarembski, futures analyst with XPRESSTRADE.
"Once we got above $600 in after-hours trading, it was off to the races," he says. "With the dollar taking it on the chin since the announcement, it's bullish for the metals." Buy stops have been hit in gold and short covering has occurred, he adds.
comments by the Fed are "very friendly to the gold market,'' said Michael Guido, director of hedge fund marketing and commodity strategy at Societe Generale in New York. "All the sideline buyers are thinking this could be the bottom of the gold market for the year. There's a lot more confidence to adding to positions.''
"The combination of inflation pressures and a slowdown in economic growth are positive for gold,'' said Michael Widmer, an analyst at Macquarie Bank Ltd. in London. "There is limited scope for the U.S. dollar to move higher now. Some uncertainty has been removed.''
Friday, June 30, 2006
Gold in New York rose for the first time this week on speculation higher energy costs will stoke inflation, boosting the metal's appeal as a hedge against accelerating prices.
Gold reached a 26-year high last month as near-record oil prices sent retail gasoline up more than 30 percent from a year earlier. Oil topped $73 a barrel today, renewing concern that higher costs for manufacturers will trigger increases in consumer products.
``There's heightened chatter about inflationary pressures with crude up more than $1,'' said Frank McGhee, head metals trader at Integrated Brokerage Services LLC in Chicago. ``That's helping gold.''
Gold for August delivery rose $7.90, or 1.4 percent, to $588.90 an ounce on the Comex division of the New York Mercantile Exchange. Prices had fallen 1.2 percent in the past three days.
Gold reached $873 an ounce, the highest ever, in 1980 after oil costs doubled in a year and consumer prices rose 12 percent.
Oil has climbed 20 percent this year partly on concern that Iran may cut exports because of a dispute over its nuclear program.
Iran's top nuclear negotiator, Ali Larijani, dismissed U.S. and European calls to accelerate his country's decision on accepting trade and technology incentives in return for suspending uranium enrichment. Crude oil reached a record $75.35 a barrel on April 21.
`It's the Unexpected'
``It's the unexpected that could happen in the Middle East,'' said Marty McNeill, a trader at R.F. Lafferty Inc. in New York. Investors who've made bets gold prices will fall are ``evening up their positions over the long weekend,'' he said.
U.S. markets will be closed for the Independence Day holiday on July 4.
``People have a fear of something happening over the long weekend,'' said Greg Sweet, a commodity broker at Infinity Brokerage Services Inc. in Chicago. ``People value gold as a safe haven.''
Prices may reach $700 to $750 an ounce by the end of this year, said Jochen Hitzfeld, a strategist at HVB in Munich.
``We are very positive on gold,'' Hitzfeld said. ``When you take the average price of gold in the first quarter of 1980 and adjust for inflation, we should be able to reach $1,300.''
Silver futures for September delivery rose 17.8 cents, or 1.7 percent, to $10.42 an ounce. Prices have surged 47 percent from a year ago. The metal reached a 25-year high of $15.20 on April 5.
Gold reached a 26-year high last month as near-record oil prices sent retail gasoline up more than 30 percent from a year earlier. Oil topped $73 a barrel today, renewing concern that higher costs for manufacturers will trigger increases in consumer products.
``There's heightened chatter about inflationary pressures with crude up more than $1,'' said Frank McGhee, head metals trader at Integrated Brokerage Services LLC in Chicago. ``That's helping gold.''
Gold for August delivery rose $7.90, or 1.4 percent, to $588.90 an ounce on the Comex division of the New York Mercantile Exchange. Prices had fallen 1.2 percent in the past three days.
Gold reached $873 an ounce, the highest ever, in 1980 after oil costs doubled in a year and consumer prices rose 12 percent.
Oil has climbed 20 percent this year partly on concern that Iran may cut exports because of a dispute over its nuclear program.
Iran's top nuclear negotiator, Ali Larijani, dismissed U.S. and European calls to accelerate his country's decision on accepting trade and technology incentives in return for suspending uranium enrichment. Crude oil reached a record $75.35 a barrel on April 21.
`It's the Unexpected'
``It's the unexpected that could happen in the Middle East,'' said Marty McNeill, a trader at R.F. Lafferty Inc. in New York. Investors who've made bets gold prices will fall are ``evening up their positions over the long weekend,'' he said.
U.S. markets will be closed for the Independence Day holiday on July 4.
``People have a fear of something happening over the long weekend,'' said Greg Sweet, a commodity broker at Infinity Brokerage Services Inc. in Chicago. ``People value gold as a safe haven.''
Prices may reach $700 to $750 an ounce by the end of this year, said Jochen Hitzfeld, a strategist at HVB in Munich.
``We are very positive on gold,'' Hitzfeld said. ``When you take the average price of gold in the first quarter of 1980 and adjust for inflation, we should be able to reach $1,300.''
Silver futures for September delivery rose 17.8 cents, or 1.7 percent, to $10.42 an ounce. Prices have surged 47 percent from a year ago. The metal reached a 25-year high of $15.20 on April 5.
Thursday, June 29, 2006
Gold prices rose Thursday, rallying near $600 an ounce before pulling back as traders booked profits.
August gold settled up $7.90 at $588.90 an ounce at the New York Mercantile Exchange. During the session, the contract rose as high as $594.90.
July silver settled at $10.333 an ounce, up 17.8 cents, off of a session high of $10.50 an ounce.
Bernard Hunter of Scotia Mocatta said the rally fizzled because near the end of the month, many traders book profits.
Also, "there was some jockeying for position in front of the expected 25 point interest rate hike by the Fed, and also the last full trading day before the long weekend," said Hunter.
Gold is regarded as a hedge against inflation, which the Fed is trying to keep under control by raising interest rates.
The Comex division of the Nymex will close early Friday, with trading suspended on Monday and Tuesday in observance of the Independence Day holiday. Trading will resume Wednesday.
July platinum settled $27.50 higher at $1,205.70 an ounce.
Chart-based buying and ideas that the Federal Reserve will not be "overly hawkish" on interest rates Thursday afternoon sent copper futures sharply higher in New York.
The most-active September copper contract rose 13.4 cents to settle at $3.3210 per pound.
August gold settled up $7.90 at $588.90 an ounce at the New York Mercantile Exchange. During the session, the contract rose as high as $594.90.
July silver settled at $10.333 an ounce, up 17.8 cents, off of a session high of $10.50 an ounce.
Bernard Hunter of Scotia Mocatta said the rally fizzled because near the end of the month, many traders book profits.
Also, "there was some jockeying for position in front of the expected 25 point interest rate hike by the Fed, and also the last full trading day before the long weekend," said Hunter.
Gold is regarded as a hedge against inflation, which the Fed is trying to keep under control by raising interest rates.
The Comex division of the Nymex will close early Friday, with trading suspended on Monday and Tuesday in observance of the Independence Day holiday. Trading will resume Wednesday.
July platinum settled $27.50 higher at $1,205.70 an ounce.
Chart-based buying and ideas that the Federal Reserve will not be "overly hawkish" on interest rates Thursday afternoon sent copper futures sharply higher in New York.
The most-active September copper contract rose 13.4 cents to settle at $3.3210 per pound.
Gold prices edged higher, in line with gains in oil, but trading remained subdued ahead of tonight's crucial interest rate decision by the US Federal Open Markets Committee (FOMC).
At 11.56 pm, spot gold was quoted up at 581.25 usd an ounce against 578.10 usd at the time of the COMEX market close yesterday. Other precious metals also edged up.
Spot silver rose at 10.33 usd against 10.20 usd, platinum was up at 1,184.50 usd from 1,180.00 usd and palladium was up at 307.50 usd against 306.00 usd.
Gold closed lower yesterday amid late US dollar strength, as 'a general air of cautiousness ahead of today's FOMC meeting kept many on the sidelines,' said TheBullionDesk analyst James Moore.
Moore said 'narrow sideways trade has continued' today in gold and that prices 'look set to hold for the remainder of the day ahead of today's rate announcement'.
The market has fully priced in a 25 basis point hike in interest rates, although investors are waiting for the statement accompanying the Fed verdict for hints about further hikes ahead.
Higher interest rates support the dollar and help address concerns about price pressures. This usually diminishes the allure of gold as an alternative investment or hedge against inflation.
'With the exception of palladium, we see no need to hurry back into metals at the moment; there is considerable risk from US inflation/growth/interest rate expectations.'
'Implied volatility is high for all metals indicating that the market is not swamped with ... sellers; this should keep trading ranges wide and perhaps biased to the downside,' said UBS Investment Bank analyst John Reade.
Gold has lost some 26 pct of its value since hitting a 26-year-high of 730 usd in mid-May, on the back of record high oil prices, geopolitical tensions and uncertain prospects for the dollar.
At 11.56 pm, spot gold was quoted up at 581.25 usd an ounce against 578.10 usd at the time of the COMEX market close yesterday. Other precious metals also edged up.
Spot silver rose at 10.33 usd against 10.20 usd, platinum was up at 1,184.50 usd from 1,180.00 usd and palladium was up at 307.50 usd against 306.00 usd.
Gold closed lower yesterday amid late US dollar strength, as 'a general air of cautiousness ahead of today's FOMC meeting kept many on the sidelines,' said TheBullionDesk analyst James Moore.
Moore said 'narrow sideways trade has continued' today in gold and that prices 'look set to hold for the remainder of the day ahead of today's rate announcement'.
The market has fully priced in a 25 basis point hike in interest rates, although investors are waiting for the statement accompanying the Fed verdict for hints about further hikes ahead.
Higher interest rates support the dollar and help address concerns about price pressures. This usually diminishes the allure of gold as an alternative investment or hedge against inflation.
'With the exception of palladium, we see no need to hurry back into metals at the moment; there is considerable risk from US inflation/growth/interest rate expectations.'
'Implied volatility is high for all metals indicating that the market is not swamped with ... sellers; this should keep trading ranges wide and perhaps biased to the downside,' said UBS Investment Bank analyst John Reade.
Gold has lost some 26 pct of its value since hitting a 26-year-high of 730 usd in mid-May, on the back of record high oil prices, geopolitical tensions and uncertain prospects for the dollar.
Wednesday, June 28, 2006
Gold Falls for Third Day in New York as Dollar Strengthens
June 28 -- Gold prices fell for the third straight day in New York as the dollar climbed against the euro, eroding the precious metal's appeal as an alternative asset.
Gold, which often moves in the opposite direction of the dollar, has dropped 21 percent from a 26-year year high of $732 an ounce on May 12. The U.S. currency rose today on speculation the Federal Reserve will signal the potential for more interest-rate increases to contain inflation. Rate futures show traders are sure the Fed will lift its benchmark a quarter-point tomorrow.
``I'm looking for gold to take a dip after the Fed raises rates,'' said Mike Sander, a commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California. ``The Fed is most likely to increase the value of the dollar.''
Gold futures for August delivery fell $3.40, or 0.6 percent, to $581 an ounce on the Comex division of the New York Mercantile Exchange. The metal has dropped 1.2 percent this week. Futures still have gained 33 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 has risen 3.3 percent against the yen and 2.3 percent versus the euro since the end of May as Fed officials signaled the need for more rate hikes.
Interest-rate futures indicate an 83 percent chance of another quarter-point increase in rate in early August. That was up from zero percent at the start of the month.
``A lot depends on market perception,'' said Jim Pogoda, an investor in Summit, New Jersey, and a former precious-metals trader for Mitsubishi Ltd. ``If the markets feel the Fed has or will overdo rate rises, then the dollar should rise and pressure gold lower. If the markets feel the Fed is behind the curve and losing credibility to contain inflation, then gold should benefit.''
Gold reached $873 an ounce, the highest ever, in 1980 after oil costs doubled in a year and consumer prices rose 12 percent.
-------------------------------------
Gold and silver rose in Asia as some investors bet the U.S. Federal Reserve may be nearing the end of its series of interest rate rises, boosting the precious metal's appeal as an alternative asset.
The Fed is expected to raise interest for a 17th straight time at the end of a two-day meeting starting today, and again in August. Some investors may be betting the central bank won't raise rates more than once or twice more on concern it will slow economic growth, ScotiaMocatta's Alastair McIntyre said.
``Gold has been closely following the Fed watch, and if people think the chance of further rates hike will lessen, then gold could go higher,'' said McIntyre, ScotiaMocatta's head of marketing, by phone from Hong Kong. ``But the market is now basically watching for the meeting.''
Gold for immediate delivery rose as much as $5.95, or 1 percent, to $585.01 an ounce. It traded at $582.84 at 11:08 a.m. Mumbai time.
Gold has fallen 20 percent since touching a record $730.40 on May 12, partly on concern the Fed will increase interest rates to contain inflation. Rising rates strengthen the dollar and make it more expensive for investors to borrow to buy gold.
Interest-rate futures show traders see 100 percent odds the Fed will boost its benchmark rate a quarter-point to 5.25 percent tomorrow. The futures indicate an 83 percent chance of another quarter-point move in August. They show traders see no chance of the Fed raising borrowing costs beyond August.
`Second-Guessing'
``The market could be second-guessing the Fed that U.S. inflation isn't doing that badly, and that a rate rise would be sufficient,'' said Peter McGuire, managing director of Commodity Warrants Australia in Sydney.
Gold tends to trade counter to the dollar, and has risen 13 percent this year compared with a 6 percent decline of the dollar against the euro. The dollar will decline to $1.30 per euro by the year-end, according to the median estimate of 32 analysts surveyed by Bloomberg. Against the euro, it fetched $1.2574 at 10:58 a.m. in Mumbai from $1.2577 yesterday.
Silver for immediate delivery rose as much as 21 cents, or 2.1 percent, to $10.37 an ounce. It traded at $10.28 at 11:09 a.m. Mumbai time.
Gold for August delivery rose as much as $2.50, or 0.4 percent, to $586.90 an ounce in after-hours trade on the Comex division of the New York Mercantile Exchange. The contract traded at $585.40 at 10:54 a.m. Mumbai time.
``I would expect gold to remain range-bound today as its very important to get a clear indication from the Fed what its future stance will be,'' Kishore Narne, head of research at Mumbai-based Anand Rathi Commodities, said today.
In India, the world's biggest gold consumer, gold prices for August delivery rose 5 rupees, or 0.1 percent, to 8,827 rupees per 10 grams, or 27,452 rupees ($592) per ounce, at 10:50 a.m. on the Multi Commodity Exchange of India Ltd. in Mumbai.
June 28 -- Gold prices fell for the third straight day in New York as the dollar climbed against the euro, eroding the precious metal's appeal as an alternative asset.
Gold, which often moves in the opposite direction of the dollar, has dropped 21 percent from a 26-year year high of $732 an ounce on May 12. The U.S. currency rose today on speculation the Federal Reserve will signal the potential for more interest-rate increases to contain inflation. Rate futures show traders are sure the Fed will lift its benchmark a quarter-point tomorrow.
``I'm looking for gold to take a dip after the Fed raises rates,'' said Mike Sander, a commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California. ``The Fed is most likely to increase the value of the dollar.''
Gold futures for August delivery fell $3.40, or 0.6 percent, to $581 an ounce on the Comex division of the New York Mercantile Exchange. The metal has dropped 1.2 percent this week. Futures still have gained 33 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 has risen 3.3 percent against the yen and 2.3 percent versus the euro since the end of May as Fed officials signaled the need for more rate hikes.
Interest-rate futures indicate an 83 percent chance of another quarter-point increase in rate in early August. That was up from zero percent at the start of the month.
``A lot depends on market perception,'' said Jim Pogoda, an investor in Summit, New Jersey, and a former precious-metals trader for Mitsubishi Ltd. ``If the markets feel the Fed has or will overdo rate rises, then the dollar should rise and pressure gold lower. If the markets feel the Fed is behind the curve and losing credibility to contain inflation, then gold should benefit.''
Gold reached $873 an ounce, the highest ever, in 1980 after oil costs doubled in a year and consumer prices rose 12 percent.
-------------------------------------
Gold and silver rose in Asia as some investors bet the U.S. Federal Reserve may be nearing the end of its series of interest rate rises, boosting the precious metal's appeal as an alternative asset.
The Fed is expected to raise interest for a 17th straight time at the end of a two-day meeting starting today, and again in August. Some investors may be betting the central bank won't raise rates more than once or twice more on concern it will slow economic growth, ScotiaMocatta's Alastair McIntyre said.
``Gold has been closely following the Fed watch, and if people think the chance of further rates hike will lessen, then gold could go higher,'' said McIntyre, ScotiaMocatta's head of marketing, by phone from Hong Kong. ``But the market is now basically watching for the meeting.''
Gold for immediate delivery rose as much as $5.95, or 1 percent, to $585.01 an ounce. It traded at $582.84 at 11:08 a.m. Mumbai time.
Gold has fallen 20 percent since touching a record $730.40 on May 12, partly on concern the Fed will increase interest rates to contain inflation. Rising rates strengthen the dollar and make it more expensive for investors to borrow to buy gold.
Interest-rate futures show traders see 100 percent odds the Fed will boost its benchmark rate a quarter-point to 5.25 percent tomorrow. The futures indicate an 83 percent chance of another quarter-point move in August. They show traders see no chance of the Fed raising borrowing costs beyond August.
`Second-Guessing'
``The market could be second-guessing the Fed that U.S. inflation isn't doing that badly, and that a rate rise would be sufficient,'' said Peter McGuire, managing director of Commodity Warrants Australia in Sydney.
Gold tends to trade counter to the dollar, and has risen 13 percent this year compared with a 6 percent decline of the dollar against the euro. The dollar will decline to $1.30 per euro by the year-end, according to the median estimate of 32 analysts surveyed by Bloomberg. Against the euro, it fetched $1.2574 at 10:58 a.m. in Mumbai from $1.2577 yesterday.
Silver for immediate delivery rose as much as 21 cents, or 2.1 percent, to $10.37 an ounce. It traded at $10.28 at 11:09 a.m. Mumbai time.
Gold for August delivery rose as much as $2.50, or 0.4 percent, to $586.90 an ounce in after-hours trade on the Comex division of the New York Mercantile Exchange. The contract traded at $585.40 at 10:54 a.m. Mumbai time.
``I would expect gold to remain range-bound today as its very important to get a clear indication from the Fed what its future stance will be,'' Kishore Narne, head of research at Mumbai-based Anand Rathi Commodities, said today.
In India, the world's biggest gold consumer, gold prices for August delivery rose 5 rupees, or 0.1 percent, to 8,827 rupees per 10 grams, or 27,452 rupees ($592) per ounce, at 10:50 a.m. on the Multi Commodity Exchange of India Ltd. in Mumbai.
The U.S. dollar was higher against other major currencies in European trading Wednesday. Gold prices fell.
The euro traded at $1.2520, down from $1.2580 late Tuesday in New York. Later, in midday trading in New York, the euro bought $1.2529.
Other dollar rates in Europe, compared with late Tuesday, included 116.35 Japanese yen, up from 116.28; 1.2486 Swiss francs, up from 1.2427; and 1.1255 Canadian dollars, up from 1.1211.
The British pound traded at $1.8152, down from $1.8230.
In midday New York trading, the dollar bought 116.29 yen and 1.2476 Swiss francs, while the pound was worth $1.8156.
Gold in London traded at $579.95 per troy ounce, down from $593.60 late Tuesday.
In Zurich, gold traded at $578.65, down from $593.40.
Gold fell $4.80 in Hong Kong to close at $583.70.
Silver traded in London at $10.24 per troy ounce, down from $10.60.
The euro traded at $1.2520, down from $1.2580 late Tuesday in New York. Later, in midday trading in New York, the euro bought $1.2529.
Other dollar rates in Europe, compared with late Tuesday, included 116.35 Japanese yen, up from 116.28; 1.2486 Swiss francs, up from 1.2427; and 1.1255 Canadian dollars, up from 1.1211.
The British pound traded at $1.8152, down from $1.8230.
In midday New York trading, the dollar bought 116.29 yen and 1.2476 Swiss francs, while the pound was worth $1.8156.
Gold in London traded at $579.95 per troy ounce, down from $593.60 late Tuesday.
In Zurich, gold traded at $578.65, down from $593.40.
Gold fell $4.80 in Hong Kong to close at $583.70.
Silver traded in London at $10.24 per troy ounce, down from $10.60.
Tuesday, June 27, 2006
Gold futures closed lower Tuesday, after soaring to as high as $599 an ounce earlier in the session, as investors remained cautious ahead of the Federal Open Market Committee decision on interest rates. Gold for August delivery closed down $3.30 at $584.4 an ounce on the New York Mercantile Exchange. "The mining stocks led gold downward as the market grew a bit nervous in anticipation of the Fed meeting and investors prepared for the long trading break in the U.S.," said Brien Lundin, editor of Gold Newsletter. Other metals prices were mixed. Silver dropped 4.5 cents at $10.195 an ounce. Platinum rose $7.0 to $1,188.3 an ounce. Palladium edged down $6.35 to $314.20 an ounce and copper declined 13.70 cents to $3.187 a pound
Monday, June 26, 2006
NEW YORK -- Gold futures closed little changed Monday, with investors keeping to the sidelines ahead of this week's Federal Reserve decision on interest rates. Gold for August delivery ended down 30 cents at $587.70 an ounce. Silver finished down 4.5 cents at $10.24 an ounce, platinum added $14.40 to $1,181.30 an ounce, palladium added $10.75 to $320.55 an ounce and copper rose 8.4 cents to $3.324 a pound
Phelps Dodge to Buy Inco and Falconbridge for $40 Billion in Cash and Stock
NEW YORK -- Phelps Dodge Corp. said Monday it is buying Canadian mining companies Inco Ltd. and Falconbridge Ltd. in a cash and stock deal worth about $40 billion that will create one of the world's largest mining companies.
The new company, to be called Phelps Dodge Inco, would have operations in more than 40 countries and employ about 40,000 people globally. It will be the world's biggest nickel producer and largest publicly traded copper producer, according to Phelps Dodge.
Inco shares jumped $7.12, or 12 percent, to $65.38, Falconbridge shares leaped $2.90, or 5.9 percent, to $52.20 and Phelps Dodge shares dropped $7.44, or 9 percent, to $75.51, all in early trading on the New York Stock Exchange.
"We're extremely excited about the powerhouse we're creating," Phelps Dodge Chief Executive J. Steven Whisler told a conference call with analysts and investors. "We truly have the chance to step up to the big leagues by combining our three companies."
Whisler, who will be CEO and chairman of the combined company once the deal is complete, also said, "The transaction we announced this morning is clearly transformational. Our key driver in this transaction is the potential for significant synergies."
Under terms of the deal, Inco shareholders will receive 0.672 shares of Phelps Dodge stock plus 17.50 Canadian dollars ($15.59) per share in cash for each share of Inco stock, representing a premium of 23 percent to Inco's market price as of close of trading on June 23.
Inco in turn will increase a previous offer for Falconbridge to 17.50 Canadian dollars ($15.59) from 12.50 Canadian dollars ($11.14) and the exchange ratio to 0.55676 shares of Inco, from 0.524 shares, for each share of Falconbridge.
Based upon the value of Phelps Dodge's total offer for Inco of 80.13 Canadian dollars ($71.40) per share, the company said the implied value of Inco's increased offer for Falconbridge is 62.11 Canadian dollars ($55.34), which is a 12 percent premium to Falconbridge's closing price on June 23.
The chief financial officer of Phelps Dodge, Ramiro Peru, said in the conference call that the company had arranged $22 billion in financing. The financing is sufficient, he said, to bring the transaction to closure. Phelps Dodge also said it planned a $5 billion share buyback program.
Phelps Dodge said its acquisition of Inco is not contingent on that company completing its deal for Falconbridge.
The deal comes as metals prices have soared during the first half of 2006, driven by strong demand from countries such as China. The plan still faces reviews by competition authorities in Europe, the United States and Canada.
Phoenix-based Phelps said the combination should result in annual synergies of $900 million by 2008. Savings from the Inco-Falconbridge combination alone are estimated at $550 million.
The main office and the new company's copper division will be headquartered in Phoenix. Inco Nickel, the new company's nickel division, will be headquartered in Toronto.
The final deal, which is subject to shareholder and regulatory approval, is expected to close in September, with Phelps Dodge shareholders owning about 40 percent of Phelps Dodge Inco, current Inco shareholders owning about 31 percent, and current Falconbridge holders owning about 29 percent.
Inco's CEO, Scott M. Hand, will be vice chairman of the combined company, while Derek Pannell, Falconbridge CEO, will become president of Inco Nickel.
The new company's 15 member board will consist of 11 members from the Phelps Dodge board and 4 from the boards of Inco and Falconbridge.
NEW YORK -- Phelps Dodge Corp. said Monday it is buying Canadian mining companies Inco Ltd. and Falconbridge Ltd. in a cash and stock deal worth about $40 billion that will create one of the world's largest mining companies.
The new company, to be called Phelps Dodge Inco, would have operations in more than 40 countries and employ about 40,000 people globally. It will be the world's biggest nickel producer and largest publicly traded copper producer, according to Phelps Dodge.
Inco shares jumped $7.12, or 12 percent, to $65.38, Falconbridge shares leaped $2.90, or 5.9 percent, to $52.20 and Phelps Dodge shares dropped $7.44, or 9 percent, to $75.51, all in early trading on the New York Stock Exchange.
"We're extremely excited about the powerhouse we're creating," Phelps Dodge Chief Executive J. Steven Whisler told a conference call with analysts and investors. "We truly have the chance to step up to the big leagues by combining our three companies."
Whisler, who will be CEO and chairman of the combined company once the deal is complete, also said, "The transaction we announced this morning is clearly transformational. Our key driver in this transaction is the potential for significant synergies."
Under terms of the deal, Inco shareholders will receive 0.672 shares of Phelps Dodge stock plus 17.50 Canadian dollars ($15.59) per share in cash for each share of Inco stock, representing a premium of 23 percent to Inco's market price as of close of trading on June 23.
Inco in turn will increase a previous offer for Falconbridge to 17.50 Canadian dollars ($15.59) from 12.50 Canadian dollars ($11.14) and the exchange ratio to 0.55676 shares of Inco, from 0.524 shares, for each share of Falconbridge.
Based upon the value of Phelps Dodge's total offer for Inco of 80.13 Canadian dollars ($71.40) per share, the company said the implied value of Inco's increased offer for Falconbridge is 62.11 Canadian dollars ($55.34), which is a 12 percent premium to Falconbridge's closing price on June 23.
The chief financial officer of Phelps Dodge, Ramiro Peru, said in the conference call that the company had arranged $22 billion in financing. The financing is sufficient, he said, to bring the transaction to closure. Phelps Dodge also said it planned a $5 billion share buyback program.
Phelps Dodge said its acquisition of Inco is not contingent on that company completing its deal for Falconbridge.
The deal comes as metals prices have soared during the first half of 2006, driven by strong demand from countries such as China. The plan still faces reviews by competition authorities in Europe, the United States and Canada.
Phoenix-based Phelps said the combination should result in annual synergies of $900 million by 2008. Savings from the Inco-Falconbridge combination alone are estimated at $550 million.
The main office and the new company's copper division will be headquartered in Phoenix. Inco Nickel, the new company's nickel division, will be headquartered in Toronto.
The final deal, which is subject to shareholder and regulatory approval, is expected to close in September, with Phelps Dodge shareholders owning about 40 percent of Phelps Dodge Inco, current Inco shareholders owning about 31 percent, and current Falconbridge holders owning about 29 percent.
Inco's CEO, Scott M. Hand, will be vice chairman of the combined company, while Derek Pannell, Falconbridge CEO, will become president of Inco Nickel.
The new company's 15 member board will consist of 11 members from the Phelps Dodge board and 4 from the boards of Inco and Falconbridge.
Sunday, June 25, 2006
Jewelers, customers watching gold prices
June 25, 2006
DENVER -- After more than 30 years in jewelry design, John Atencio has built a reputation for heavier rings, necklaces and earrings.
When gold prices topped $730 an ounce earlier this year, he became more conscious of how thick his pieces are -- and the accompanying higher costs.
Still, while retailers such as Helzberg Diamonds say they've seen some designers using less gold in each piece, Atencio is reluctant to change his style.
"When it got over $700, then the red lights were going off," Atencio said. "Then it was kind of like: 'God, how high is it going to go and are we going to be in business?' "
Gold prices have fallen more than 20 percent since May 12, when they reached a 26-year high of $732 per ounce, but are still close to $600 an ounce. Jewelers are accepting lower profit margins, feeling pressure to raise prices and sometimes tweaking their designs.
Customers are still coming. U.S. sales actually seem to be rising, said John Calnon of the World Gold Council.
"It's a counterintuitive approach," he said. "With gold in the news constantly, the consumer is thinking about gold."
U.S. prices for gold jewelry are more dependent on the design rather than the gold itself, he said, and customers tend to buy it for adornment rather than as an investment. The gold council predicted that lower-income customers would buy within their budgets, while affluent customers might even buy more.
Sales were $17.7 billion in 2005 amid strong gold prices, a 4.4 percent increase from 2004. Calnon said he could not release the council's internal forecast for sales this year.
Nancy Cook, 45, estimates she visits one of Atencio's stores monthly and that she and her husband buy six pieces a year.
"I have noticed a difference in prices, but if I like the piece, I really don't worry about the price of gold," said Cook.
June 25, 2006
DENVER -- After more than 30 years in jewelry design, John Atencio has built a reputation for heavier rings, necklaces and earrings.
When gold prices topped $730 an ounce earlier this year, he became more conscious of how thick his pieces are -- and the accompanying higher costs.
Still, while retailers such as Helzberg Diamonds say they've seen some designers using less gold in each piece, Atencio is reluctant to change his style.
"When it got over $700, then the red lights were going off," Atencio said. "Then it was kind of like: 'God, how high is it going to go and are we going to be in business?' "
Gold prices have fallen more than 20 percent since May 12, when they reached a 26-year high of $732 per ounce, but are still close to $600 an ounce. Jewelers are accepting lower profit margins, feeling pressure to raise prices and sometimes tweaking their designs.
Customers are still coming. U.S. sales actually seem to be rising, said John Calnon of the World Gold Council.
"It's a counterintuitive approach," he said. "With gold in the news constantly, the consumer is thinking about gold."
U.S. prices for gold jewelry are more dependent on the design rather than the gold itself, he said, and customers tend to buy it for adornment rather than as an investment. The gold council predicted that lower-income customers would buy within their budgets, while affluent customers might even buy more.
Sales were $17.7 billion in 2005 amid strong gold prices, a 4.4 percent increase from 2004. Calnon said he could not release the council's internal forecast for sales this year.
Nancy Cook, 45, estimates she visits one of Atencio's stores monthly and that she and her husband buy six pieces a year.
"I have noticed a difference in prices, but if I like the piece, I really don't worry about the price of gold," said Cook.
Investors craving pure gold now have an American supplier: The U.S. Mint has unveiled the nation's first 24-karat gold coin at an official strike ceremony at its West Point, N.Y., facility.
Modeled on the traditional buffalo nickel, the American Buffalo coin has a buffalo on one side and a Native American on the other.
It comes in two versions, both stamped with a $50 face value but worth substantially more because they are made of pure gold.
A "proof" version with a high-relief, mirror finish aimed at collectors will sell for $800, while the less flashy bullion version of the coin -- targeted at investors known as "gold bugs" -- will retail for the price of an ounce of gold plus a 5 to 7.5 percent markup to cover the cost of making and selling it. The $50 face value is symbolic and set by Congress, just as most commemorative silver coins sold by the mint have a face value of $1 but are sold for $35 or more because of their silver content.
The U.S. Mint has sold 22-karat gold coins known as American Eagles since 1985, but Deputy Director David Lebryk said the new offering is aimed at investors who want coins that are pure gold.
He estimates that the world market in gold coins is divided between sales of 24-karat coins such as the Canadian Maple Leaf, which account for 60 percent of the market, and more durable 22-karat coins, a category dominated by the American Eagle. Last year the mint sold 420,000 American Eagle coins, which also have a face value of $50 and contain 1 ounce of gold plus some alloy metal for durability.
"There appears to be a market for both," Lebryk said. The mint will produce only 300,000 proof-quality American Buffalo coins but will mint enough bullion coins to meet demand, he said. All the gold will be domestically mined.
The coin's debut in West Point comes at a time when gold prices have spiked and then dropped significantly. Gold prices hit a 26-year high of $732 an ounce in mid-May but have now dropped more than 22 percent to close at $568.80 Monday. The fall has already prompted the mint to drop the planned price of the collector's edition coin from $875, and the bullion coins will rise and fall with the market.
That volatility makes some financial advisers leery of recommending the coins as an investment. "I don't think it makes any sense at all as an investment," said Greg Evans, a fee-based financial planner with the Millstone Evans Group of the District of Columbia and Colorado. "Commodity prices are already way up, (and) if you put a high percentage of your assets into things that have already gone up a lot, you're guaranteeing yourself poor returns."
Demand for gold for jewelry and other uses has already started to slump in the face of much higher prices, according to World Gold Council data.
"There are times when gold is good ... but right now it's in its downturn. It might be good to see where it settles and then go in," said DaRayl D. Davis, a District of Columbia investment adviser. He recommends that clients put 10 to 15 percent of their assets into high-risk investments, but not all of that should be gold.
Yahoo Finance columnist Robert Kiyosaki, best known for his "Rich Dad" series of books, has been investing in gold since 1972 and said he thinks it is still a good investment.
"I still think gold will go to $1,500 an ounce. I'm betting against the U.S. dollar. Gold is a hedge against U.S. government mismanagement," said Kiyosaki, adding that his family members have a tradition of saving all their spare change for months on end and then trading all the coins in for a single gold coin. He said he prefers bullion coins like the South African krugerrand because it is readily exchangeable and carries a relatively small premium over its value in pure gold.
The dollar has been strengthening against the yen and the euro based on speculation that the Federal Reserve will continue to raise a key interest rate to control inflation.
Gold has another drawback as an investment: Generally it is taxed as a collectible rather than at the lower long-term capital gains rates associated with investments in mutual funds and stocks.
In the end, small investors would do best to use gold as a small part of their portfolio, said David M. Darst, chief investment strategist for Morgan Stanley's Global Wealth Management Group. He recommends investors put 4 percent of their money in gold because it tends to move in the opposite direction from stocks and bonds and hold its value in times of crisis when other investments fall apart.
"It's an insurance policy you hope not to collect on," he said.
Modeled on the traditional buffalo nickel, the American Buffalo coin has a buffalo on one side and a Native American on the other.
It comes in two versions, both stamped with a $50 face value but worth substantially more because they are made of pure gold.
A "proof" version with a high-relief, mirror finish aimed at collectors will sell for $800, while the less flashy bullion version of the coin -- targeted at investors known as "gold bugs" -- will retail for the price of an ounce of gold plus a 5 to 7.5 percent markup to cover the cost of making and selling it. The $50 face value is symbolic and set by Congress, just as most commemorative silver coins sold by the mint have a face value of $1 but are sold for $35 or more because of their silver content.
The U.S. Mint has sold 22-karat gold coins known as American Eagles since 1985, but Deputy Director David Lebryk said the new offering is aimed at investors who want coins that are pure gold.
He estimates that the world market in gold coins is divided between sales of 24-karat coins such as the Canadian Maple Leaf, which account for 60 percent of the market, and more durable 22-karat coins, a category dominated by the American Eagle. Last year the mint sold 420,000 American Eagle coins, which also have a face value of $50 and contain 1 ounce of gold plus some alloy metal for durability.
"There appears to be a market for both," Lebryk said. The mint will produce only 300,000 proof-quality American Buffalo coins but will mint enough bullion coins to meet demand, he said. All the gold will be domestically mined.
The coin's debut in West Point comes at a time when gold prices have spiked and then dropped significantly. Gold prices hit a 26-year high of $732 an ounce in mid-May but have now dropped more than 22 percent to close at $568.80 Monday. The fall has already prompted the mint to drop the planned price of the collector's edition coin from $875, and the bullion coins will rise and fall with the market.
That volatility makes some financial advisers leery of recommending the coins as an investment. "I don't think it makes any sense at all as an investment," said Greg Evans, a fee-based financial planner with the Millstone Evans Group of the District of Columbia and Colorado. "Commodity prices are already way up, (and) if you put a high percentage of your assets into things that have already gone up a lot, you're guaranteeing yourself poor returns."
Demand for gold for jewelry and other uses has already started to slump in the face of much higher prices, according to World Gold Council data.
"There are times when gold is good ... but right now it's in its downturn. It might be good to see where it settles and then go in," said DaRayl D. Davis, a District of Columbia investment adviser. He recommends that clients put 10 to 15 percent of their assets into high-risk investments, but not all of that should be gold.
Yahoo Finance columnist Robert Kiyosaki, best known for his "Rich Dad" series of books, has been investing in gold since 1972 and said he thinks it is still a good investment.
"I still think gold will go to $1,500 an ounce. I'm betting against the U.S. dollar. Gold is a hedge against U.S. government mismanagement," said Kiyosaki, adding that his family members have a tradition of saving all their spare change for months on end and then trading all the coins in for a single gold coin. He said he prefers bullion coins like the South African krugerrand because it is readily exchangeable and carries a relatively small premium over its value in pure gold.
The dollar has been strengthening against the yen and the euro based on speculation that the Federal Reserve will continue to raise a key interest rate to control inflation.
Gold has another drawback as an investment: Generally it is taxed as a collectible rather than at the lower long-term capital gains rates associated with investments in mutual funds and stocks.
In the end, small investors would do best to use gold as a small part of their portfolio, said David M. Darst, chief investment strategist for Morgan Stanley's Global Wealth Management Group. He recommends investors put 4 percent of their money in gold because it tends to move in the opposite direction from stocks and bonds and hold its value in times of crisis when other investments fall apart.
"It's an insurance policy you hope not to collect on," he said.
Saturday, June 24, 2006
The downturn in gold prices will not make a huge dent in second-quarter profits, experts say, pointing out that prices are still much higher than this time last year.
"It was a progressive rally between March and May and then fell from May through to June, so at the end of the day I don't think the current quarter is going to look that bad compared to the first quarter," said Geoff Stanley, precious metals analyst with BMO Nesbitt Burns.
"The spike on the way up was so sharp that there really wasn't a huge amount of it that actually impacted on the June quarter."
The price of gold climbed from around $550 an ounce in March to a high of $730 in mid-May. Since then, gold has dropped significantly and is now below $600 an ounce.
On Friday, gold futures were off $5.90 at $579.50 due to pressure from a stronger U.S. dollar, which reduces bullion's allure as an alternative investment.
Michael Gray, an analyst with Pacific International, said most analysts did not expect gold to run up above $700. "There is still a pretty decent price from April through to part of May," he said.
Compared with last year, producers are seen benefiting from higher gold prices as bullion traded around $430 an ounce in the second quarter of 2005.
"We are looking at strong year-on-year performances. We will actually see strong profitability reported, but quite clearly it's down from what it would have been in the $700 to $730 an ounce range we had a while ago," said Stanley.
Gold producers agreed. "If $720 had stuck, we would have made more money," said Agnico-Eagle Mines Ltd. spokesman David Smith. "We sell our gold at spot ... so most certainly if gold prices fall than our revenues will fall accordingly," he said.
Mid-tier producer Iamgold Corp. does not anticipate a dramatic change in terms of the average price for the quarter.
"In terms of what we will look like, it will have some impact, but I don't think a significant impact," Iamgold Chief Executive Joe Conway said, noting that results will be "better" than the same quarter last year.
Goldcorp Inc., North America's third largest producer, said a drop in the price from over $700 to under $600 will obviously affect all gold mining companies.
The world's biggest gold producer, Barrick Gold Corp. said that gold at current prices versus two weeks ago could have an impact, though it remained bullish on the outlook.
"Despite the recent drawback, we still see the fundamentals strong and compelling for the longer term," said Barrick spokesman Vince Borg.
"Sentiment in the short term can change but the underlying strength behind the rally of the last few years is still there."
Part of that underlying strength has come from investment in Exchange Traded Funds, which brought a new batch of players into the market. The funds, also known as ETFs, are securities that give investors direct exposure to the precious metal without the hassle of storing or insuring the product.
"The ETF gold has not declined. There are investors who have very strong hands, and that's one of the pluses in this market, is this shift to commodities as assets," said Martin Murenbeeld, a gold analyst with M. Murenbeeld & Associates.
"I would not have expected gold to make a base in the mid-$550 range."
"It was a progressive rally between March and May and then fell from May through to June, so at the end of the day I don't think the current quarter is going to look that bad compared to the first quarter," said Geoff Stanley, precious metals analyst with BMO Nesbitt Burns.
"The spike on the way up was so sharp that there really wasn't a huge amount of it that actually impacted on the June quarter."
The price of gold climbed from around $550 an ounce in March to a high of $730 in mid-May. Since then, gold has dropped significantly and is now below $600 an ounce.
On Friday, gold futures were off $5.90 at $579.50 due to pressure from a stronger U.S. dollar, which reduces bullion's allure as an alternative investment.
Michael Gray, an analyst with Pacific International, said most analysts did not expect gold to run up above $700. "There is still a pretty decent price from April through to part of May," he said.
Compared with last year, producers are seen benefiting from higher gold prices as bullion traded around $430 an ounce in the second quarter of 2005.
"We are looking at strong year-on-year performances. We will actually see strong profitability reported, but quite clearly it's down from what it would have been in the $700 to $730 an ounce range we had a while ago," said Stanley.
Gold producers agreed. "If $720 had stuck, we would have made more money," said Agnico-Eagle Mines Ltd. spokesman David Smith. "We sell our gold at spot ... so most certainly if gold prices fall than our revenues will fall accordingly," he said.
Mid-tier producer Iamgold Corp. does not anticipate a dramatic change in terms of the average price for the quarter.
"In terms of what we will look like, it will have some impact, but I don't think a significant impact," Iamgold Chief Executive Joe Conway said, noting that results will be "better" than the same quarter last year.
Goldcorp Inc., North America's third largest producer, said a drop in the price from over $700 to under $600 will obviously affect all gold mining companies.
The world's biggest gold producer, Barrick Gold Corp. said that gold at current prices versus two weeks ago could have an impact, though it remained bullish on the outlook.
"Despite the recent drawback, we still see the fundamentals strong and compelling for the longer term," said Barrick spokesman Vince Borg.
"Sentiment in the short term can change but the underlying strength behind the rally of the last few years is still there."
Part of that underlying strength has come from investment in Exchange Traded Funds, which brought a new batch of players into the market. The funds, also known as ETFs, are securities that give investors direct exposure to the precious metal without the hassle of storing or insuring the product.
"The ETF gold has not declined. There are investors who have very strong hands, and that's one of the pluses in this market, is this shift to commodities as assets," said Martin Murenbeeld, a gold analyst with M. Murenbeeld & Associates.
"I would not have expected gold to make a base in the mid-$550 range."
Friday, June 23, 2006
Gold and silver prices bounced back from early dollar-triggered weakness Friday, as equities recovered and the euro stabilized late in the day.
Gold _ regarded as an alternative investment to the dollar _ had opened sharply weaker after the U.S. currency climbed to its most robust levels in nearly two months. While choppy, the metals remained within the trading bands they've been in for 1 1/2 weeks now.
August gold settled up $2.60 to $588 a troy ounce on the New York Mercantile Exchange. July silver added 7.5 cents to $10.285 an ounce, while September gained 7.5 cents to $10.382 an ounce.
The metals gradually recovered during the course of the day. This was due to a move up in the Dow industrials, said Bernard Hunter, director of precious metals with Scotia Mocatta, and also the euro's rise back above the psychologically important $1.25 mark later in the day.
July platinum lost $9.20 to $1,166.90 an ounce, while October lost $9.70 to $1,179.40. September palladium slipped $4.10 to $309.80 an ounce.
The benchmark September copper contract settled 10.25 cents higher at $3.1510 per pound.
August crude oil futures ended 3 cents higher at $70.87 a barrel after rising as high as $71.30 a barrel.
July gasoline futures rose 0.95 cent to $2.1275 a gallon. July heating oil finished at $1.9626 a gallon, down 0.92 cent.
July natural gas fell 21.3 cents to settle at $6.226 a million British thermal units.
Gold _ regarded as an alternative investment to the dollar _ had opened sharply weaker after the U.S. currency climbed to its most robust levels in nearly two months. While choppy, the metals remained within the trading bands they've been in for 1 1/2 weeks now.
August gold settled up $2.60 to $588 a troy ounce on the New York Mercantile Exchange. July silver added 7.5 cents to $10.285 an ounce, while September gained 7.5 cents to $10.382 an ounce.
The metals gradually recovered during the course of the day. This was due to a move up in the Dow industrials, said Bernard Hunter, director of precious metals with Scotia Mocatta, and also the euro's rise back above the psychologically important $1.25 mark later in the day.
July platinum lost $9.20 to $1,166.90 an ounce, while October lost $9.70 to $1,179.40. September palladium slipped $4.10 to $309.80 an ounce.
The benchmark September copper contract settled 10.25 cents higher at $3.1510 per pound.
August crude oil futures ended 3 cents higher at $70.87 a barrel after rising as high as $71.30 a barrel.
July gasoline futures rose 0.95 cent to $2.1275 a gallon. July heating oil finished at $1.9626 a gallon, down 0.92 cent.
July natural gas fell 21.3 cents to settle at $6.226 a million British thermal units.
Bema Gold (BGO:Amex) got a lift after the Vancouver, B.C.-based mining company said received approval to list its common shares on the New York Stock Exchange. Trading is scheduled to begin on July 14 under the ticker symbol BGO. Bema is not issuing any new shares or raising any new capital as part of the listing. Shares gained 16 cents, or 3.4%, to $4.82.
Thursday, June 22, 2006
China should buy more gold with its foreign exchange reserves, an official newspaper said in a commentary on Monday.
The China Securities Journal said gold accounted for only 1.3 percent of China's foreign currency reserves, which hit a world record $875.1 billion at the end of March.
In rich countries, by contrast, gold makes up 50 percent to 60 percent of reserves, it said.
Worries about the momentum of the U.S. economy; fears among financial experts that the dollar is on a long-term depreciating trend; doubts that the euro can replace the dollar as a major reserve currency; and concern that overseas demand for U.S. Treasury securities is drying up -- except on the part of China -- were all reasons why China should buy more gold, the paper said.
Against this background, gold was playing a much more important role in the global monetary system, it said.
"It would be a wise step for China to appropriately increase its gold reserves," said the China Securities Journal, which is owned by Xinhua, the state news agency.
It cited Russia and South Korea as examples of countries that had switched part of their reserves out of dollars and into gold.
The paper recalled a recent recommendation by an expert at the Beijing Gold Economy Development Research Centre that China should quadruple its gold reserves to 2,500 tonnes from 600 tonnes now.
"China should raise its gold reserves so those reserves can account for 3 percent to 5 percent of the foreign exchange reserves, instead of current 1.3 percent," the China Gold newspaper on May 9 quoted Liu Shanen as telling a conference.
The China Securities Journal said gold accounted for only 1.3 percent of China's foreign currency reserves, which hit a world record $875.1 billion at the end of March.
In rich countries, by contrast, gold makes up 50 percent to 60 percent of reserves, it said.
Worries about the momentum of the U.S. economy; fears among financial experts that the dollar is on a long-term depreciating trend; doubts that the euro can replace the dollar as a major reserve currency; and concern that overseas demand for U.S. Treasury securities is drying up -- except on the part of China -- were all reasons why China should buy more gold, the paper said.
Against this background, gold was playing a much more important role in the global monetary system, it said.
"It would be a wise step for China to appropriately increase its gold reserves," said the China Securities Journal, which is owned by Xinhua, the state news agency.
It cited Russia and South Korea as examples of countries that had switched part of their reserves out of dollars and into gold.
The paper recalled a recent recommendation by an expert at the Beijing Gold Economy Development Research Centre that China should quadruple its gold reserves to 2,500 tonnes from 600 tonnes now.
"China should raise its gold reserves so those reserves can account for 3 percent to 5 percent of the foreign exchange reserves, instead of current 1.3 percent," the China Gold newspaper on May 9 quoted Liu Shanen as telling a conference.
SHANGHAI (XFN-ASIA) - Two central bank officials suggested China can convert part of its foreign exchange reserves to gold holdings to head off risks from the depreciation of the US dollar, state media reported.
Converting part of foreign exchange reserves to gold can protect and increase the reserve assets, the official Shanghai Securities News reported,
citing an article written by Zhao Qinming, an official at the central bank's financial research institution and Luo Bin of its accounting department.
The article was published on the latest edition of China Money - a monthly magazine controlled by the People's Bank of China, the central bank, the paper said.
(1 usd = 8.00 yuan)
Converting part of foreign exchange reserves to gold can protect and increase the reserve assets, the official Shanghai Securities News reported,
citing an article written by Zhao Qinming, an official at the central bank's financial research institution and Luo Bin of its accounting department.
The article was published on the latest edition of China Money - a monthly magazine controlled by the People's Bank of China, the central bank, the paper said.
(1 usd = 8.00 yuan)
Gold jumped above $590 an ounce on Thursday, extending the previous day's sharp rise, as gains in other metals and firm oil prices boosted speculative buying.
But the market struggled to get clear direction in the short term, with dealers awaiting the Federal Reserve's rate-setting meeting on June 28-29 and keeping an eye on U.S. equities and currency markets.
"We are seeing signs that people have become more enthusiastic in gold in the last 48 hours," John Reade, precious metals analyst at UBS Investment Bank, said.
Short-term sentiment was positive and prices had an upward bias in the next week, he added.
Spot gold (XAU=) hit a high of $594.80 an ounce, its best level since June 13, before easing to $592.90/$593.60 by 1005 GMT, against $589.20/589.90 late in New York.
Gold, used in jewellery and investment, gained more than 2 percent on Wednesday on fund buying, triggered by a weaker U.S. dollar and stronger crude oil prices.
Oil prices climbed to $71 a barrel on Thursday after a smaller-than-expected rise in U.S. gasoline stocks reignited talk of resilient oil demand in the world's top consumer. Copper gained more than five percent on speculative buying.
Analysts said prices might remain well supported ahead of next week's COMEX option expiries, with large open interest at the $600 strike. But they saw choppy trade ahead as the current correction phase was not yet over.
"The push by investors into commodities has not run its course but the panic to buy has been eliminated. Those who think commodities are a one-way bet have either been on holidays for the past 5-6 weeks, or have an unrealistic view of commodity cycles," Commonwealth Bank of Australia said in a report.
FED MEET
Traders awaited the meeting of the Fed, which is seen raising interest rates by a quarter percentage point to 5.25 percent in its 17th straight rate rise. Investors would look for signs for another hike in August.
Higher U.S. rates support the dollar and may diminish gold's allure as an alternative investment.
"No big bulls will come to the market ahead of the meeting. I am still bullish but I don't want to make any big moves until we clear June," a metals trader in Singapore said.
An official and an economist at the central bank in China wrote in an article that the country should convert some of its foreign exchange reserves, the world's largest, into gold to hedge against the dollar's weakness. [ID:nPEK57217]
"We have heard similar comments on many occasions and we do not believe that this represents a change in policy," UBS said in a report.
In other precious metals, platinum (XPT=) rose to a two-week high of $1,198 an ounce before settling at $1,196/1,202, versus $1,183/1,191 late in the U.S. market.
Palladium (XPD=) rose to $314/320 from $310/315, while silver (XAG=) was up at $10.56/10.66 an ounce from $10.51/10.61.
But the market struggled to get clear direction in the short term, with dealers awaiting the Federal Reserve's rate-setting meeting on June 28-29 and keeping an eye on U.S. equities and currency markets.
"We are seeing signs that people have become more enthusiastic in gold in the last 48 hours," John Reade, precious metals analyst at UBS Investment Bank, said.
Short-term sentiment was positive and prices had an upward bias in the next week, he added.
Spot gold (XAU=) hit a high of $594.80 an ounce, its best level since June 13, before easing to $592.90/$593.60 by 1005 GMT, against $589.20/589.90 late in New York.
Gold, used in jewellery and investment, gained more than 2 percent on Wednesday on fund buying, triggered by a weaker U.S. dollar and stronger crude oil prices.
Oil prices climbed to $71 a barrel on Thursday after a smaller-than-expected rise in U.S. gasoline stocks reignited talk of resilient oil demand in the world's top consumer. Copper gained more than five percent on speculative buying.
Analysts said prices might remain well supported ahead of next week's COMEX option expiries, with large open interest at the $600 strike. But they saw choppy trade ahead as the current correction phase was not yet over.
"The push by investors into commodities has not run its course but the panic to buy has been eliminated. Those who think commodities are a one-way bet have either been on holidays for the past 5-6 weeks, or have an unrealistic view of commodity cycles," Commonwealth Bank of Australia said in a report.
FED MEET
Traders awaited the meeting of the Fed, which is seen raising interest rates by a quarter percentage point to 5.25 percent in its 17th straight rate rise. Investors would look for signs for another hike in August.
Higher U.S. rates support the dollar and may diminish gold's allure as an alternative investment.
"No big bulls will come to the market ahead of the meeting. I am still bullish but I don't want to make any big moves until we clear June," a metals trader in Singapore said.
An official and an economist at the central bank in China wrote in an article that the country should convert some of its foreign exchange reserves, the world's largest, into gold to hedge against the dollar's weakness. [ID:nPEK57217]
"We have heard similar comments on many occasions and we do not believe that this represents a change in policy," UBS said in a report.
In other precious metals, platinum (XPT=) rose to a two-week high of $1,198 an ounce before settling at $1,196/1,202, versus $1,183/1,191 late in the U.S. market.
Palladium (XPD=) rose to $314/320 from $310/315, while silver (XAG=) was up at $10.56/10.66 an ounce from $10.51/10.61.
Wednesday, June 21, 2006
Glamis Gold Gain More Than 7 Percent
Shares of Glamis Gold Ltd. rose more than 7 per cent Wednesday after the gold miner doubled its reserve estimates at a project in Mexico.
The shares rose $2.43 or 6.9 per cent to $37.70 on the Toronto Stock Exchange.
The company revised its estimates for its Penasquito project in Zacatecas, Mexico, saying proven and probable gold reserves have doubled to 9.98 million ounces while proven and probable silver reserves have grown 86 per cent to 575 million ounces.
“With this update, company-wide gold reserves have nearly tripled in 2006,” said Kevin McArthur, president and chief executive. “Our team is now fully engaged at the site and we are excited to begin work on the ground.”
The revised estimates are based on new results from over 67,000 meters of drilling received since the completion of the original project feasibility study in November 2005, the company said.
An updated feasibility study based on a doubling of mill throughput to 100,000 tonnes per day is expected to be completed in August.
Shares of Glamis Gold Ltd. rose more than 7 per cent Wednesday after the gold miner doubled its reserve estimates at a project in Mexico.
The shares rose $2.43 or 6.9 per cent to $37.70 on the Toronto Stock Exchange.
The company revised its estimates for its Penasquito project in Zacatecas, Mexico, saying proven and probable gold reserves have doubled to 9.98 million ounces while proven and probable silver reserves have grown 86 per cent to 575 million ounces.
“With this update, company-wide gold reserves have nearly tripled in 2006,” said Kevin McArthur, president and chief executive. “Our team is now fully engaged at the site and we are excited to begin work on the ground.”
The revised estimates are based on new results from over 67,000 meters of drilling received since the completion of the original project feasibility study in November 2005, the company said.
An updated feasibility study based on a doubling of mill throughput to 100,000 tonnes per day is expected to be completed in August.
Gold and metals were falling Wednesday amid continued interest-rate jitters and concerns about global economic growth. Shares of metals miners were sharply higher in recent trading, however, tracking the broader positive tone on Wall Street.
Gold for August delivery was recently down $1.70, or 0.3%, at $578.80 an ounce. Among other metals, silver for July delivery was down 8 cents, or 0.8%, to $10.19 an ounce and copper for July delivery was losing 2 cents to $3.09.
With little economic news to provide a direction, metals are mostly drifting ahead of the Federal Reserve's meeting next week, says Jon Nadler, investment products analyst at bullion dealer Kitco.
Commodities and global markets have been rocked for over a month amid nervousness that global central banks are raising rates to curb growth and inflationary pressures, notably from surging commodities prices.
At the core of concerns is uncertainty over whether the Fed will lift interest rates too much and trigger a slowdown of the U.S. economy, which is already showing signs of decelerating.
"There are reports from market analysts expressing a growing concern about the cumulative effect that incessant interest rate rises will have on the credit-addicted U.S. consumers, who now account for almost 70% of the economy," Nadler writes.
Slowing U.S. consumption, which has gobbled up the exports of fast-growing economies such as China over the past few years, would be a drag on the global economy and hurt demand for commodities.
Metals and other commodities, which have soared over the past few years amid a strong global growth outlook, have taken a beating, especially as the dollar strengthened over the past month. A stronger greenback pressures the price of dollar-denominated commodities, such as gold, as it takes less of the currency to buy the same amount of gold.
The dollar, which had been declining since late last year, received a jolt in mid-May, as the Fed clearly signaled it would again hike rates at the end of June. The market is also increasingly pricing in another quarter-point hike later this year.
But with markets now in a wait-and-see mode ahead of the Fed's meeting next week, both the dollar and metals were moving lower Wednesday. The Dollar Index, which tracks the greenback against a basket of key currencies, was recently down 0.3%.
"The specter of rising interest rates has reappeared, as have the U.S. dollar's woes, despite the prosthetic device of a quarter percent offered by the Fed," Nadler writes. "However, gold should be having a better day than it is, given the spongy condition of the U.S. currency."
Besides the Fed, many central banks are also increasingly backing up their inflation-fighting rhetoric with actual rate hikes. Adding to dollar weakness on Wednesday, European Central Bank President Jean-Claude Trichet signaled more rate hikes were likely in the eurozone this year.
"We are not satisfied with what we are observing with regard to inflation in our own area," Trichet said in a speech at the European Parliament, according to Bloomberg. "We'll continue to do all that's necessary to counter inflationary risks and anchor inflationary expectations."
Likewise, Bank of Japan Governor Toshihiko Fukui on Tuesday fueled expectations that the BOJ will hasten a process to unravel its 5-year-old policy of keeping interest rates near zero. Fukui said that interest rates need to move from zero "without delay."
As a bearish tone remained in the metals market, gold failed to sustain early safe-haven flows amid nervousness over a possible North Korean nuclear missile test.
A North Korean Foreign Ministry official on Tuesday said his country is "not bound" by any previous statement on testing, according to Bloomberg.
Meanwhile, the Philadelphia Gold and Silver index was recently up 4%, the Amex Gold Bugs index was up 4.9% and the CBOE Gold index was rising 4.3%.
Among the biggest gainers, Agnico Eagle Mines (AEM:NYSE) was up 5.3%, Gold Fields (GFI:NYSE) was up 6% and Hecla Mining (HL:NYSE) was up 5.5%.
Glamis Gold (GLG:NYSE) jumped 8% after the Reno, Nevada-based miner doubled the estimate of gold reserves at its Penasquito mine in Mexico.
The recently launched Market Vectors-Gold Miners (GDX:AMEX) exchange-traded fund, which tracks the performance of the Amex Gold Miners Index, was up 3.4%.
ETFs tracking the metals themselves were also rising. The iShares Silver Trust (SLV:AMEX) was up 1.2%, and the StreetTRACKS Gold Trust (GLD:NYSE) was rising 0.7%.
Gold for August delivery was recently down $1.70, or 0.3%, at $578.80 an ounce. Among other metals, silver for July delivery was down 8 cents, or 0.8%, to $10.19 an ounce and copper for July delivery was losing 2 cents to $3.09.
With little economic news to provide a direction, metals are mostly drifting ahead of the Federal Reserve's meeting next week, says Jon Nadler, investment products analyst at bullion dealer Kitco.
Commodities and global markets have been rocked for over a month amid nervousness that global central banks are raising rates to curb growth and inflationary pressures, notably from surging commodities prices.
At the core of concerns is uncertainty over whether the Fed will lift interest rates too much and trigger a slowdown of the U.S. economy, which is already showing signs of decelerating.
"There are reports from market analysts expressing a growing concern about the cumulative effect that incessant interest rate rises will have on the credit-addicted U.S. consumers, who now account for almost 70% of the economy," Nadler writes.
Slowing U.S. consumption, which has gobbled up the exports of fast-growing economies such as China over the past few years, would be a drag on the global economy and hurt demand for commodities.
Metals and other commodities, which have soared over the past few years amid a strong global growth outlook, have taken a beating, especially as the dollar strengthened over the past month. A stronger greenback pressures the price of dollar-denominated commodities, such as gold, as it takes less of the currency to buy the same amount of gold.
The dollar, which had been declining since late last year, received a jolt in mid-May, as the Fed clearly signaled it would again hike rates at the end of June. The market is also increasingly pricing in another quarter-point hike later this year.
But with markets now in a wait-and-see mode ahead of the Fed's meeting next week, both the dollar and metals were moving lower Wednesday. The Dollar Index, which tracks the greenback against a basket of key currencies, was recently down 0.3%.
"The specter of rising interest rates has reappeared, as have the U.S. dollar's woes, despite the prosthetic device of a quarter percent offered by the Fed," Nadler writes. "However, gold should be having a better day than it is, given the spongy condition of the U.S. currency."
Besides the Fed, many central banks are also increasingly backing up their inflation-fighting rhetoric with actual rate hikes. Adding to dollar weakness on Wednesday, European Central Bank President Jean-Claude Trichet signaled more rate hikes were likely in the eurozone this year.
"We are not satisfied with what we are observing with regard to inflation in our own area," Trichet said in a speech at the European Parliament, according to Bloomberg. "We'll continue to do all that's necessary to counter inflationary risks and anchor inflationary expectations."
Likewise, Bank of Japan Governor Toshihiko Fukui on Tuesday fueled expectations that the BOJ will hasten a process to unravel its 5-year-old policy of keeping interest rates near zero. Fukui said that interest rates need to move from zero "without delay."
As a bearish tone remained in the metals market, gold failed to sustain early safe-haven flows amid nervousness over a possible North Korean nuclear missile test.
A North Korean Foreign Ministry official on Tuesday said his country is "not bound" by any previous statement on testing, according to Bloomberg.
Meanwhile, the Philadelphia Gold and Silver index was recently up 4%, the Amex Gold Bugs index was up 4.9% and the CBOE Gold index was rising 4.3%.
Among the biggest gainers, Agnico Eagle Mines (AEM:NYSE) was up 5.3%, Gold Fields (GFI:NYSE) was up 6% and Hecla Mining (HL:NYSE) was up 5.5%.
Glamis Gold (GLG:NYSE) jumped 8% after the Reno, Nevada-based miner doubled the estimate of gold reserves at its Penasquito mine in Mexico.
The recently launched Market Vectors-Gold Miners (GDX:AMEX) exchange-traded fund, which tracks the performance of the Amex Gold Miners Index, was up 3.4%.
ETFs tracking the metals themselves were also rising. The iShares Silver Trust (SLV:AMEX) was up 1.2%, and the StreetTRACKS Gold Trust (GLD:NYSE) was rising 0.7%.
Tuesday, June 20, 2006
Gold Gains as Korean Missile Sparks Haven Buying by Investors
June 20 -- Gold rose on concern that North Korea may be preparing to test a long-range ballistic missile, prompting some investors to buy bullion as a haven.
The missile may eventually have the capacity to strike the U.S., the New York Times said yesterday, citing former National Security Council aide Gary Samore. Gold typically rises in times of geopolitical tension. A conflict over Iran's nuclear program helped push gold to a 26-year high last month. Since then, prices have dropped 21 percent.
``The market's gotten enough of a liquidation, it's coming back to looking at core fundamentals,'' said Frank McGhee, head metals trader at Integrated Brokerage Services LLC in Chicago. ``Gold will start refocusing on North Korea, Iran and the hurricane season.''
Gold futures for August delivery rose $8.10, or 1.4 percent, to $580.50 an ounce on the Comex division of the New York Mercantile Exchange. Prices reached a high of $732 on May 12 and are up 30 percent from a year ago. A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
Gold for immediate delivery rose $10.45, or 1.8 percent, to $575.70 an ounce at 7:30 p.m. in London. The precious metal has fallen for five consecutive weeks since reaching a high of $730.40 on May 12.
Gold has rallied during previous instances of turmoil or political unrest. Spot gold surged 5.3 percent in Sept. 11, 2001, when terrorists attacked the U.S.
Missile or Satellite?
North Korea may be preparing to launch a satellite rather than testing a missile, South Korea's ruling party said, citing Unification Minister Lee Jong Seok.
``It is difficult to discern whether the launch vehicle is a missile or a satellite,'' Uri Party spokesman Woo Sang Ho said today after party leaders met Lee, who also serves as the nation's security chief.
``You have a little confusion out there with North Korea, so people would rather be safe than sorry,'' said Domenick Nardo, a trader at FIC Commodities in New York. ``We had some strong fund buying. They really pumped it up.''
Gold also rose today after the dollar had its biggest decline against the yen in two weeks, making the precious metals cheaper for Japanese buyers. Gold traditionally moves in the opposite direction of the U.S. dollar.
The yen rose against the dollar after Bank of Japan Governor Toshihiko Fukui said the central bank needs to adjust interest rates from near zero percent ``without delay.'' Some investors buy gold to hedge against the erosion of dollar- denominated assets.
Gold Volatility
Wide price fluctuations have discouraged some investors from buying or selling the metal, analysts said. Gold's historical volatility, or the rate at which a price moves up and down, is at 45 percent in the past 10 days, compared with 39 percent during the same period a month earlier.
``There are people standing aside,'' said Jeffrey Christian, managing director of CPM Group, a New-York based metals research firm. ``The market has not been able to firmly move above $570 for the past few trading days, so there are people who think it's vulnerable to another leg down. We could spike down to $540 and move up to $580.''
William B. O'Neill, a partner at Logic Advisors LLC in Upper Saddle River, New Jersey, is advising clients to stay out of the gold market.
``I don't think the market is yet ready to go back up,'' said O'Neill, who advised clients three weeks ago to pull out of the market. ``If you look at the action recently, it's been a little bit sloppy, a little bit two-sided, and certainly vastly different than the big bull run that we had over the past year.''
Silver for July delivery rose 30 cents, or 3 percent, to $10.27 an ounce on the Comex. Prices earlier touched $9.785.
June 20 -- Gold rose on concern that North Korea may be preparing to test a long-range ballistic missile, prompting some investors to buy bullion as a haven.
The missile may eventually have the capacity to strike the U.S., the New York Times said yesterday, citing former National Security Council aide Gary Samore. Gold typically rises in times of geopolitical tension. A conflict over Iran's nuclear program helped push gold to a 26-year high last month. Since then, prices have dropped 21 percent.
``The market's gotten enough of a liquidation, it's coming back to looking at core fundamentals,'' said Frank McGhee, head metals trader at Integrated Brokerage Services LLC in Chicago. ``Gold will start refocusing on North Korea, Iran and the hurricane season.''
Gold futures for August delivery rose $8.10, or 1.4 percent, to $580.50 an ounce on the Comex division of the New York Mercantile Exchange. Prices reached a high of $732 on May 12 and are up 30 percent from a year ago. A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
Gold for immediate delivery rose $10.45, or 1.8 percent, to $575.70 an ounce at 7:30 p.m. in London. The precious metal has fallen for five consecutive weeks since reaching a high of $730.40 on May 12.
Gold has rallied during previous instances of turmoil or political unrest. Spot gold surged 5.3 percent in Sept. 11, 2001, when terrorists attacked the U.S.
Missile or Satellite?
North Korea may be preparing to launch a satellite rather than testing a missile, South Korea's ruling party said, citing Unification Minister Lee Jong Seok.
``It is difficult to discern whether the launch vehicle is a missile or a satellite,'' Uri Party spokesman Woo Sang Ho said today after party leaders met Lee, who also serves as the nation's security chief.
``You have a little confusion out there with North Korea, so people would rather be safe than sorry,'' said Domenick Nardo, a trader at FIC Commodities in New York. ``We had some strong fund buying. They really pumped it up.''
Gold also rose today after the dollar had its biggest decline against the yen in two weeks, making the precious metals cheaper for Japanese buyers. Gold traditionally moves in the opposite direction of the U.S. dollar.
The yen rose against the dollar after Bank of Japan Governor Toshihiko Fukui said the central bank needs to adjust interest rates from near zero percent ``without delay.'' Some investors buy gold to hedge against the erosion of dollar- denominated assets.
Gold Volatility
Wide price fluctuations have discouraged some investors from buying or selling the metal, analysts said. Gold's historical volatility, or the rate at which a price moves up and down, is at 45 percent in the past 10 days, compared with 39 percent during the same period a month earlier.
``There are people standing aside,'' said Jeffrey Christian, managing director of CPM Group, a New-York based metals research firm. ``The market has not been able to firmly move above $570 for the past few trading days, so there are people who think it's vulnerable to another leg down. We could spike down to $540 and move up to $580.''
William B. O'Neill, a partner at Logic Advisors LLC in Upper Saddle River, New Jersey, is advising clients to stay out of the gold market.
``I don't think the market is yet ready to go back up,'' said O'Neill, who advised clients three weeks ago to pull out of the market. ``If you look at the action recently, it's been a little bit sloppy, a little bit two-sided, and certainly vastly different than the big bull run that we had over the past year.''
Silver for July delivery rose 30 cents, or 3 percent, to $10.27 an ounce on the Comex. Prices earlier touched $9.785.
Gold prices drifted higher on Tuesday, after slipping about 1.5 percent in Asian trade, as dollar weakness encouraged investors to add positions.
But the near-term outlook was bearish and the metal was seen hovering in a broad range, taking direction from moves in the dollar and oil and from geopolitical developments, dealers said.
"The market appears to be trying to consolidate and finding a base around current levels. The mood remains very cautious and uncertain," said Yingxi Yu, metals analyst at Barclays Capital.
"We are still quite positive over the medium term because of macro-economic and currency factors, but over the near term it might be advisable to wait for further corrections before coming back as buyers again."
Spot gold (XAU=) hit a low of $560.50 an ounce in Asia before rebounding as high as $572.00. It was quoted at $570.25/571.25 by 0921 GMT, against $568.80/569.50 late in New York on Monday.
Gold had support from a drop in the dollar against the yen and the euro after comments by Bank of Japan Governor Toshihiko Fukui suggested the bank would lift interest rates.
A softer dollar makes gold cheaper for holders of other currencies and generally lifts demand.
Dealers also noted developments in North Korea.
The United States and Japan warned the country against a missile launch as officials said the secretive communist state appeared to have completed fuelling for a test flight that could possibly reach as far as Alaska. [ID:nSP223505]
"Geopolitical factors would likely provide long-term support, with softening tensions in Iran being countered by a resurgent North Korea in their nuclear ambitions," Standard Bank said in a report.
MINING SHARES MOVE
Mining shares in Australia and Hong Kong tracked earlier drops in bullion. Newcrest Mining (NCM.AX), Australia's top gold miner, shed 3.17 percent, Oxiana (OXR.AX) lost 3.55 percent, while Zijin Mining Group (2899.HK) dropped about 6 percent.
But European miners reversed earlier losses, with BHP Billiton (BLT.L) gaining 1.2 percent and Anglo American (AAL.L) adding 1.8 percent, shrugging off a slide in copper prices.
The physical gold market saw buying interest from jewellers and investors in Southeast Asia.
"We saw good buying when the price last fell below $550. I wouldn't say demand is fantastic right now but there's constant physical buying," said a dealer in Singapore.
In other precious metals, platinum (XPT=) rose to $1,157/1,163 an ounce from $1,138/1,144 late in New York.
"We forecast the platinum market will stay in deficit over our entire three-year forecast period," said John Reade, analyst at UBS Investment Bank, predicting prices at $1,150 after one month and at $1,200 three months from now.
Palladium (XPD=) rose to $294/299 an ounce from $290/295, while silver (XAG=) was at $10.03/10.13 an ounce from $9.97/10.07.
But the near-term outlook was bearish and the metal was seen hovering in a broad range, taking direction from moves in the dollar and oil and from geopolitical developments, dealers said.
"The market appears to be trying to consolidate and finding a base around current levels. The mood remains very cautious and uncertain," said Yingxi Yu, metals analyst at Barclays Capital.
"We are still quite positive over the medium term because of macro-economic and currency factors, but over the near term it might be advisable to wait for further corrections before coming back as buyers again."
Spot gold (XAU=) hit a low of $560.50 an ounce in Asia before rebounding as high as $572.00. It was quoted at $570.25/571.25 by 0921 GMT, against $568.80/569.50 late in New York on Monday.
Gold had support from a drop in the dollar against the yen and the euro after comments by Bank of Japan Governor Toshihiko Fukui suggested the bank would lift interest rates.
A softer dollar makes gold cheaper for holders of other currencies and generally lifts demand.
Dealers also noted developments in North Korea.
The United States and Japan warned the country against a missile launch as officials said the secretive communist state appeared to have completed fuelling for a test flight that could possibly reach as far as Alaska. [ID:nSP223505]
"Geopolitical factors would likely provide long-term support, with softening tensions in Iran being countered by a resurgent North Korea in their nuclear ambitions," Standard Bank said in a report.
MINING SHARES MOVE
Mining shares in Australia and Hong Kong tracked earlier drops in bullion. Newcrest Mining (NCM.AX), Australia's top gold miner, shed 3.17 percent, Oxiana (OXR.AX) lost 3.55 percent, while Zijin Mining Group (2899.HK) dropped about 6 percent.
But European miners reversed earlier losses, with BHP Billiton (BLT.L) gaining 1.2 percent and Anglo American (AAL.L) adding 1.8 percent, shrugging off a slide in copper prices.
The physical gold market saw buying interest from jewellers and investors in Southeast Asia.
"We saw good buying when the price last fell below $550. I wouldn't say demand is fantastic right now but there's constant physical buying," said a dealer in Singapore.
In other precious metals, platinum (XPT=) rose to $1,157/1,163 an ounce from $1,138/1,144 late in New York.
"We forecast the platinum market will stay in deficit over our entire three-year forecast period," said John Reade, analyst at UBS Investment Bank, predicting prices at $1,150 after one month and at $1,200 three months from now.
Palladium (XPD=) rose to $294/299 an ounce from $290/295, while silver (XAG=) was at $10.03/10.13 an ounce from $9.97/10.07.
Monday, June 19, 2006
UTI Mutual Fund is launching a gold exchange traded fund. The fund house has filed a draft offer document for the same with the Securities and Exchange Board of India.
UTI Gold-ETF is an open ended fund listed on one or more stock exchanges in the form of exchange traded fund (ETF) tracking gold.
The fund would be a passively managed one, designed to track the performance and yield of gold prices or gold-related instruments, the offer document said.
Each UTI Goldshare unit represents units of fractional undivided beneficial interest in the ownership of the underlying assets (i.e. gold) of the scheme.
“Allotment price will be on the basis of the closing value of the gold price on the closure of new fund offer period. Subsequently, the authorised participants can deposit cash for creation of units or they can redeem units.
The prices of gold considered for the purchase of creation of units will be the prices on the day on which the bank is able to acquire gold from the market.
The prices of gold taken for redemption of units will be the prices of gold on the next working day of redemption date,” the offer document said.
In the beginning, each unit of UTI Goldshare will be equal to price of one gram of the value of gold.
Once the scheme reopens, issue and redemption of units will be linked to the prevailing net asset value, it added.
Earlier, Benchmark Mutual Fund had filed its offer document for launching a similar fund.
UTI Gold-ETF is an open ended fund listed on one or more stock exchanges in the form of exchange traded fund (ETF) tracking gold.
The fund would be a passively managed one, designed to track the performance and yield of gold prices or gold-related instruments, the offer document said.
Each UTI Goldshare unit represents units of fractional undivided beneficial interest in the ownership of the underlying assets (i.e. gold) of the scheme.
“Allotment price will be on the basis of the closing value of the gold price on the closure of new fund offer period. Subsequently, the authorised participants can deposit cash for creation of units or they can redeem units.
The prices of gold considered for the purchase of creation of units will be the prices on the day on which the bank is able to acquire gold from the market.
The prices of gold taken for redemption of units will be the prices of gold on the next working day of redemption date,” the offer document said.
In the beginning, each unit of UTI Goldshare will be equal to price of one gram of the value of gold.
Once the scheme reopens, issue and redemption of units will be linked to the prevailing net asset value, it added.
Earlier, Benchmark Mutual Fund had filed its offer document for launching a similar fund.
New Gold Coin Is Purest Yet From U.S. Mint
A new United States gold coin, the purest ever made, will go on sale today to investors worldwide.
The $50 coin, known as the American Buffalo, revives a popular design first used on five-cent pieces in 1913. One side portrays an American Indian chief and the other a bison standing on a grassy mound. Slightly larger and thicker than a half dollar and weighing one ounce, the new coin will be 99.99 percent pure, and is inscribed ".9999 fine gold."
Since the United States began minting gold coins in the 1790's, their standard fineness has always been about 90 percent pure gold, mixed with copper and sometimes silver to give coins the hardness to withstand circulation. The 24-karat bullion coin was authorized last year by Congress in an effort to compete with similar coins made by Canada, South Africa and other countries. Investors and collectors alike generally prefer the greater purity. Because gold coins have not circulated in the United States since 1933, hardness is no longer an issue.
"There is a demand for 24-karat gold bullion coins among the American public," said David Lebryk, the deputy director of the United States Mint, adding that foreign 24-karat gold coins represent a growing segment of the American market.
The American Buffalo will be minted at West Point, N.Y., and sold through dealers at a price based on the daily spot price of gold, with a markup of about 12 percent, according to Becky Bailey, a spokeswoman at the Mint. The closing spot price of an ounce of gold in New York on Friday was $578.40.
A high-relief, mirror-finish version known as a proof will also be made for sale to collectors. Quantities of the regular coin will be determined by demand; 300,000 of the proof version will be minted in 2006 and sold initially at a price of $875.
"I think collectors will embrace this coin. I don't think the Mint will have any trouble selling out," said Jeff Garrett, president of the Professional Numismatists Guild, in a telephone interview Friday. The guild is a nonprofit group that promotes coin collecting and protects collectors' interests.
The design of the buffalo nickel was also revived for a limited-run silver dollar coin in 2001.
A new United States gold coin, the purest ever made, will go on sale today to investors worldwide.
The $50 coin, known as the American Buffalo, revives a popular design first used on five-cent pieces in 1913. One side portrays an American Indian chief and the other a bison standing on a grassy mound. Slightly larger and thicker than a half dollar and weighing one ounce, the new coin will be 99.99 percent pure, and is inscribed ".9999 fine gold."
Since the United States began minting gold coins in the 1790's, their standard fineness has always been about 90 percent pure gold, mixed with copper and sometimes silver to give coins the hardness to withstand circulation. The 24-karat bullion coin was authorized last year by Congress in an effort to compete with similar coins made by Canada, South Africa and other countries. Investors and collectors alike generally prefer the greater purity. Because gold coins have not circulated in the United States since 1933, hardness is no longer an issue.
"There is a demand for 24-karat gold bullion coins among the American public," said David Lebryk, the deputy director of the United States Mint, adding that foreign 24-karat gold coins represent a growing segment of the American market.
The American Buffalo will be minted at West Point, N.Y., and sold through dealers at a price based on the daily spot price of gold, with a markup of about 12 percent, according to Becky Bailey, a spokeswoman at the Mint. The closing spot price of an ounce of gold in New York on Friday was $578.40.
A high-relief, mirror-finish version known as a proof will also be made for sale to collectors. Quantities of the regular coin will be determined by demand; 300,000 of the proof version will be minted in 2006 and sold initially at a price of $875.
"I think collectors will embrace this coin. I don't think the Mint will have any trouble selling out," said Jeff Garrett, president of the Professional Numismatists Guild, in a telephone interview Friday. The guild is a nonprofit group that promotes coin collecting and protects collectors' interests.
The design of the buffalo nickel was also revived for a limited-run silver dollar coin in 2001.
Gold prices fell 2.1 percent on Monday as the dollar's rise and weaker oil prompted selling by investors who are wary of taking large positions after a recent selloff, dealers said.
"You have to expect gold to move in quite volatile ranges, between $550 (an ounce) and $600, until it finds that physical demand has adjusted to more stable prices," said Matthew Turner, analyst at Virtual Metals.
Any price rally in the current environment would peter out at the slightest provocation such as a rise in the dollar, he added.
Early buying faded fast after spot gold (XAU=) rose as high as $580.10 an ounce as investors were cautious to add new positions.
Gold was trading at $569.90/570.20 by 1426 GMT after falling as low as $565.70, compared with $578.00/578.70 in New York late on Friday.
"There's some support at $566, and there are offers around $573 and $574, so I expect it to be rangebound for the time being," a European trader said at 1420 GMT.
The distraction of soccer's World Cup meant that activity later in the day was muted, he added.
Despite gold being off last week's three-month low of $543, traders said renewed dollar strength undermined sentiment.
The dollar struck an eight-week high against the yen and rose across the board, boosted by expectations the U.S. Federal Reserve will raise short-term interest rates perhaps two more times in coming months.
A stronger dollar usually pressures gold, which is generally priced in dollars globally, because it becomes costlier in key overseas trading areas like Europe and Asia.
A weaker oil price was another factor weighing on gold.
Gold often tracks oil prices because investors use the metal as an inflation hedge when energy prices are high.
"The current mood of sharp price swings looks set to continue, but for now it seems gold has found a base ahead of $550," said James Moore, analyst at TheBullionDesk.com.
In other precious metals, silver (XAG=) fell as low as $9.83 an ounce before rising to $9.94/10.04, against $10.13/10.23 late in New York.
Platinum (XPT=) drifted down to $1,138/1,144 an ounce from $1,147/1,155 in the U.S. market, while palladium (XPD=) edged down to $294/299 an ounce from $300/305.
"You have to expect gold to move in quite volatile ranges, between $550 (an ounce) and $600, until it finds that physical demand has adjusted to more stable prices," said Matthew Turner, analyst at Virtual Metals.
Any price rally in the current environment would peter out at the slightest provocation such as a rise in the dollar, he added.
Early buying faded fast after spot gold (XAU=) rose as high as $580.10 an ounce as investors were cautious to add new positions.
Gold was trading at $569.90/570.20 by 1426 GMT after falling as low as $565.70, compared with $578.00/578.70 in New York late on Friday.
"There's some support at $566, and there are offers around $573 and $574, so I expect it to be rangebound for the time being," a European trader said at 1420 GMT.
The distraction of soccer's World Cup meant that activity later in the day was muted, he added.
Despite gold being off last week's three-month low of $543, traders said renewed dollar strength undermined sentiment.
The dollar struck an eight-week high against the yen and rose across the board, boosted by expectations the U.S. Federal Reserve will raise short-term interest rates perhaps two more times in coming months.
A stronger dollar usually pressures gold, which is generally priced in dollars globally, because it becomes costlier in key overseas trading areas like Europe and Asia.
A weaker oil price was another factor weighing on gold.
Gold often tracks oil prices because investors use the metal as an inflation hedge when energy prices are high.
"The current mood of sharp price swings looks set to continue, but for now it seems gold has found a base ahead of $550," said James Moore, analyst at TheBullionDesk.com.
In other precious metals, silver (XAG=) fell as low as $9.83 an ounce before rising to $9.94/10.04, against $10.13/10.23 late in New York.
Platinum (XPT=) drifted down to $1,138/1,144 an ounce from $1,147/1,155 in the U.S. market, while palladium (XPD=) edged down to $294/299 an ounce from $300/305.
Sunday, June 18, 2006
Gold may get more precious in long-term’
New Delhi, June 18 A two-day rebound in the gold, which remains one of the most preferred asset class for Indians despite all the recent brouhaha over the stock market, might not still indicate an immediate uptrend, but market analysts are holding onto their bullish long-term outlook for the precious metal.
While leading global investment banks like Merrill Lynch and Deutsche Bank have raised their gold price forecasts, a Wall Street investment guru went to the extent of terming the current correction as the “last great buying opportunity” in the gold’s history.
Moreover, this bullish outlook is not just for the international markets as domestic gold prices have always been known to be driven mostly by the global cues. Anticipation of further rise in the gold, after declining more than 20% from record high above the Rs 10,000 per ten gram level scaled early in May, attracted renewed buying at lower levels and pushed gold prices northward between June 5-16.
Similar trends were witnessed in the stock market, where the benchmark Sensex bounced back by nearly 1,000 points in two days after plunging nearly 30% from its peak above 12,600 level on May 11. The analysts said that the drop in gold prices to lowest levels in more than two months also sparked renewed buying interest by investors seeking an alternative investment to the stocks and bonds.
While, the stock markets’ two-day rebound has failed to lead the analysts once again turning bullish in their near term outlooks, the commodity market observers were seen reiterating their positive forecasts even during the bearish phase of gold.
Deutsche Bank said in its latest report on gold prices that it was reaffirming its bullish outlook on the precious metal and forecasted an average gold spot price of 582 dollars per ounce for 2006, 660 dollars for 2007 and 750 dollars per ounce for 2008. Another leading investment bank Merrill Lynch went a step further and raised its gold price forecasts on the back of expectations for a weaker US dollar, potential inflationary pressure and other geopolitical factors.
Merrill Lynch’s Andrew Richards raised the 2006 gold price forecast by 125 dollars to 650 dollars per ounce and by 175 dollars to 675 dollar per ounce for 2007. Interestingly, these two bullish outlooks came during a sharp downslide across all the asset classes, including equity and commodity markets.
However, Merrill Lynch said that gold prices might remain bearish in the short-term, a view shared by most of the analysts globally and in the domestic market. At the same time, there is another group of market analysts who expect the correction to be either over or nearing an end and expect flat-to-firm trends going forward.
Peter Grandich, the founder of Grandich Publications and known as the “Wall Street Whizkid” said in his commentary on metals and mining industry, the Grandich letter, “The current correction is going to end up as the last great buying opportunity in what...Remains the greatest secular bull market in gold’s history.”
New Delhi, June 18 A two-day rebound in the gold, which remains one of the most preferred asset class for Indians despite all the recent brouhaha over the stock market, might not still indicate an immediate uptrend, but market analysts are holding onto their bullish long-term outlook for the precious metal.
While leading global investment banks like Merrill Lynch and Deutsche Bank have raised their gold price forecasts, a Wall Street investment guru went to the extent of terming the current correction as the “last great buying opportunity” in the gold’s history.
Moreover, this bullish outlook is not just for the international markets as domestic gold prices have always been known to be driven mostly by the global cues. Anticipation of further rise in the gold, after declining more than 20% from record high above the Rs 10,000 per ten gram level scaled early in May, attracted renewed buying at lower levels and pushed gold prices northward between June 5-16.
Similar trends were witnessed in the stock market, where the benchmark Sensex bounced back by nearly 1,000 points in two days after plunging nearly 30% from its peak above 12,600 level on May 11. The analysts said that the drop in gold prices to lowest levels in more than two months also sparked renewed buying interest by investors seeking an alternative investment to the stocks and bonds.
While, the stock markets’ two-day rebound has failed to lead the analysts once again turning bullish in their near term outlooks, the commodity market observers were seen reiterating their positive forecasts even during the bearish phase of gold.
Deutsche Bank said in its latest report on gold prices that it was reaffirming its bullish outlook on the precious metal and forecasted an average gold spot price of 582 dollars per ounce for 2006, 660 dollars for 2007 and 750 dollars per ounce for 2008. Another leading investment bank Merrill Lynch went a step further and raised its gold price forecasts on the back of expectations for a weaker US dollar, potential inflationary pressure and other geopolitical factors.
Merrill Lynch’s Andrew Richards raised the 2006 gold price forecast by 125 dollars to 650 dollars per ounce and by 175 dollars to 675 dollar per ounce for 2007. Interestingly, these two bullish outlooks came during a sharp downslide across all the asset classes, including equity and commodity markets.
However, Merrill Lynch said that gold prices might remain bearish in the short-term, a view shared by most of the analysts globally and in the domestic market. At the same time, there is another group of market analysts who expect the correction to be either over or nearing an end and expect flat-to-firm trends going forward.
Peter Grandich, the founder of Grandich Publications and known as the “Wall Street Whizkid” said in his commentary on metals and mining industry, the Grandich letter, “The current correction is going to end up as the last great buying opportunity in what...Remains the greatest secular bull market in gold’s history.”
Saturday, June 17, 2006
Though they’ve come down now, gold prices had moved to astronomical levels. Where was the demand coming from?
Two factors were at play here. The first, demand-supply fundamentals like the disruption in South Africa impacted global supply. But, it hasn’t disturbed the balance significantly.
The second is the behaviour of financial markets. Gold prices have an inverse relation with the value of the dollar the coefficient of correlation is over 0.98. When the dollar weakens against the euro, the price of gold tends to move up, as funds move away from the dollar and towards gold.
So how do you explain the reversal? The stock market correction seems to have impacted gold prices too.
The strength of the dollar vis-Ã -vis the euro has driven gold prices downwards of late. This relationship between the two should continue. The acceptance of Bernanke’s conservative monetary policy stance will strengthen this feeling. In any case, a continuous decline in the dollar could impact European exports, and the Euro zone would try and arrest a freefall in that currency. This would result in phases of weaker gold prices.
That said, while the supply of gold is limited, demand is ever increasing. So the price can only move up in the long run.
So where do you see gold prices a year from now?
It is hard to say. While the basic relationship depends on the euro-dollar strength, we have seen deviations. In the first half of 2005, everything was moving up gold, dollar, crude oil, metals, stocks and interest rates. But the strength of the euro would depend on the current account deficit of the US, which is around 6 per cent of GDP today. This can’t come down in the near future and as long as it remains high, the dollar is bound to come under pressure, which in turn, would push gold prices up.
So you’re saying this is a good time to invest in gold.
I’m saying investment decisions should be based on fundamentals, for which ideally one should look at a longer time horizon. Given that the US deficit wouldn’t stabilise in a hurry, there would be a proclivity towards a weaker dollar. However, short-term disturbances would always be there driven by other economic and socio-political factors.
Even at Rs 8,700-plus gold does seem expensive. Will this impact the traditional market in India?
The domestic price of gold is fully correlated with the international price. Although India is the largest consumer of gold, it is just a price taker. Therefore, the price would tend to mimic the global trends. Further, we import all the gold that we use, so there is no real supply issue as far as India is concerned.
Retail buying is unlikely to come down with higher prices, as gold is treated as a sign of wealth. So when prices rise, one would be tempted to buy more gold to maintain one’s status, and also because one knows that the price will not come down in future. That makes the precious metal a safe investment harbour.
How will the demand of gold move when gold ETF is launched in India?
The demand for gold would be on the rise with the launch of gold ETFs. But since we are price takers and gold is freely importable, the supply constraint may not be there. We need to wait and watch on the response of these funds.
What factors would affect the price of gold in the near future. Would rising interest rates impact its demand?
The gold price in India is driven by the international price of gold and the exchange rate. If the international price rises and the rupee weakens, we will see higher prices and vice versa. Interest rates may not impact the demand for gold. This is because the investor in gold is different from the one who deals with fixed income instruments. To the extent he does borrow money to invest in gold, there would be some caution. However, given that the gains from gold are much higher than the incremental interest cost of borrowing, it may not be limiting factor.
How does one hold gold in demat form. What are the advantages of doing so?
In a simplistic manner, you can take your gold to an authorised warehouse of NCDEX and get it certified by an authorised assayer. Your commodity balance account with the DP (depository participant) is then credited with, say, 1 kg of gold. You can then hold it or sell it by simply transferring it to the depository balance of the buyer. This way, there is no physical movement and the transfer of monetary balances is instantaneous. The advantage of dealing on NCDEX is that as a buyer you are sure of the quality and as a seller your demat account is adjusted according to your need.
How can one check the quality and standard of gold?
There are assaying agencies that check the purity of the gold based on the contract specifications of NCDEX. When gold is brought to the warehouse, it has to meet these specifications and any tolerable deviation goes at a discount. As a buyer of this gold on the exchange, you are guaranteed for this level of purity.
Two factors were at play here. The first, demand-supply fundamentals like the disruption in South Africa impacted global supply. But, it hasn’t disturbed the balance significantly.
The second is the behaviour of financial markets. Gold prices have an inverse relation with the value of the dollar the coefficient of correlation is over 0.98. When the dollar weakens against the euro, the price of gold tends to move up, as funds move away from the dollar and towards gold.
So how do you explain the reversal? The stock market correction seems to have impacted gold prices too.
The strength of the dollar vis-Ã -vis the euro has driven gold prices downwards of late. This relationship between the two should continue. The acceptance of Bernanke’s conservative monetary policy stance will strengthen this feeling. In any case, a continuous decline in the dollar could impact European exports, and the Euro zone would try and arrest a freefall in that currency. This would result in phases of weaker gold prices.
That said, while the supply of gold is limited, demand is ever increasing. So the price can only move up in the long run.
So where do you see gold prices a year from now?
It is hard to say. While the basic relationship depends on the euro-dollar strength, we have seen deviations. In the first half of 2005, everything was moving up gold, dollar, crude oil, metals, stocks and interest rates. But the strength of the euro would depend on the current account deficit of the US, which is around 6 per cent of GDP today. This can’t come down in the near future and as long as it remains high, the dollar is bound to come under pressure, which in turn, would push gold prices up.
So you’re saying this is a good time to invest in gold.
I’m saying investment decisions should be based on fundamentals, for which ideally one should look at a longer time horizon. Given that the US deficit wouldn’t stabilise in a hurry, there would be a proclivity towards a weaker dollar. However, short-term disturbances would always be there driven by other economic and socio-political factors.
Even at Rs 8,700-plus gold does seem expensive. Will this impact the traditional market in India?
The domestic price of gold is fully correlated with the international price. Although India is the largest consumer of gold, it is just a price taker. Therefore, the price would tend to mimic the global trends. Further, we import all the gold that we use, so there is no real supply issue as far as India is concerned.
Retail buying is unlikely to come down with higher prices, as gold is treated as a sign of wealth. So when prices rise, one would be tempted to buy more gold to maintain one’s status, and also because one knows that the price will not come down in future. That makes the precious metal a safe investment harbour.
How will the demand of gold move when gold ETF is launched in India?
The demand for gold would be on the rise with the launch of gold ETFs. But since we are price takers and gold is freely importable, the supply constraint may not be there. We need to wait and watch on the response of these funds.
What factors would affect the price of gold in the near future. Would rising interest rates impact its demand?
The gold price in India is driven by the international price of gold and the exchange rate. If the international price rises and the rupee weakens, we will see higher prices and vice versa. Interest rates may not impact the demand for gold. This is because the investor in gold is different from the one who deals with fixed income instruments. To the extent he does borrow money to invest in gold, there would be some caution. However, given that the gains from gold are much higher than the incremental interest cost of borrowing, it may not be limiting factor.
How does one hold gold in demat form. What are the advantages of doing so?
In a simplistic manner, you can take your gold to an authorised warehouse of NCDEX and get it certified by an authorised assayer. Your commodity balance account with the DP (depository participant) is then credited with, say, 1 kg of gold. You can then hold it or sell it by simply transferring it to the depository balance of the buyer. This way, there is no physical movement and the transfer of monetary balances is instantaneous. The advantage of dealing on NCDEX is that as a buyer you are sure of the quality and as a seller your demat account is adjusted according to your need.
How can one check the quality and standard of gold?
There are assaying agencies that check the purity of the gold based on the contract specifications of NCDEX. When gold is brought to the warehouse, it has to meet these specifications and any tolerable deviation goes at a discount. As a buyer of this gold on the exchange, you are guaranteed for this level of purity.
Friday, June 16, 2006
LONDON/NEW YORK, June 16 - Gold surged on Friday on bargain hunting after this week's fall to a three-month low and on oil's late rise to $70, although a firmer dollar in the U.S. afternoon may have capped gains.
Gold (XAU=) rose as high as $585.00 an ounce before easing to $578.00/578.70 late in New York, still up nearly 2 percent, against $566.50/7.50 on Thursday, when it jumped as much as 3 percent.
Analysts said gold remained under threat and may slip, as people were not yet convinced the recent downtrend is over.
"Gold must prove its case at levels above $585 (an ounce), and above $640, to provide confidence of the type that is required to resume its bull run," Jon Nadler, an analyst with bullion dealer Kitco, wrote in a note.
"If the negative bias reemerges, and does so with the swiftness and energy it recently exhibited, then the price compass will inevitably point to a range of from $490 to $540," he said.
Gold rebounded as a recovery in global share prices lifted confidence of investors, who earlier in the week exited commodities to avoid risks.
European shares reversed their gains after China's central bank said it would raise its reserve requirements and the U.S. current account deficit narrowed more than expected.
But traders said there was no impact of China news on precious metal prices.
"Overall, I see precious metals to remain vulnerable in the short-term. however, I don't expect it to test new lows since physical demand and bargain-hunting should provide some support," said another European dealer.
Gold came under some pressure in late U.S. trade as the dollar, after falling earlier, steadied. But oil firming to $70 a barrel in New York helped offset the dollar's strength.
Gold is often viewed as an alternative investment to dollar and a hedge against inflation.
"It's (gold) vulnerable to any deterioration in sentiment towards global asset markets. The world does look a calmer and happier place, but that could change very quickly," John Reade, analyst at UBS Investment Bank, said.
In other precious metals, silver (XAG=) advanced as high as $10.35 an ounce before moving to $10.13/10.23, compared with $10.00/10.10 previously.
Platinum (XPT=) fell to $1,147/1,155 an ounce from $1,160/1,170, while palladium (XPD=) rose to $300/305, compared with $295/$300.
Gold (XAU=) rose as high as $585.00 an ounce before easing to $578.00/578.70 late in New York, still up nearly 2 percent, against $566.50/7.50 on Thursday, when it jumped as much as 3 percent.
Analysts said gold remained under threat and may slip, as people were not yet convinced the recent downtrend is over.
"Gold must prove its case at levels above $585 (an ounce), and above $640, to provide confidence of the type that is required to resume its bull run," Jon Nadler, an analyst with bullion dealer Kitco, wrote in a note.
"If the negative bias reemerges, and does so with the swiftness and energy it recently exhibited, then the price compass will inevitably point to a range of from $490 to $540," he said.
Gold rebounded as a recovery in global share prices lifted confidence of investors, who earlier in the week exited commodities to avoid risks.
European shares reversed their gains after China's central bank said it would raise its reserve requirements and the U.S. current account deficit narrowed more than expected.
But traders said there was no impact of China news on precious metal prices.
"Overall, I see precious metals to remain vulnerable in the short-term. however, I don't expect it to test new lows since physical demand and bargain-hunting should provide some support," said another European dealer.
Gold came under some pressure in late U.S. trade as the dollar, after falling earlier, steadied. But oil firming to $70 a barrel in New York helped offset the dollar's strength.
Gold is often viewed as an alternative investment to dollar and a hedge against inflation.
"It's (gold) vulnerable to any deterioration in sentiment towards global asset markets. The world does look a calmer and happier place, but that could change very quickly," John Reade, analyst at UBS Investment Bank, said.
In other precious metals, silver (XAG=) advanced as high as $10.35 an ounce before moving to $10.13/10.23, compared with $10.00/10.10 previously.
Platinum (XPT=) fell to $1,147/1,155 an ounce from $1,160/1,170, while palladium (XPD=) rose to $300/305, compared with $295/$300.
LONDON, June 16 - Gold surged 3.3 percent on Friday on dollar weakness and firm oil prices, but pared gains in the afternoon trade as some investors sold their positions ahead of the weekend.
Gold remained under threat and may slip, as people were not yet convinced the recent downtrend is over, analysts said.
"The majority of trading has been done this week. I think we will have a quiet close to the week," said a precious metals trader in London.
"We were nervously bullish this morning. Since then it has come down but we are still up," he added.
Gold (XAU=) rose as high as $585.00 an ounce before easing to $574.30/575.00 by 1352 GMT, against $566.50/$567.50 in late New York on Thursday, when it jumped as much as three percent.
Gold rebounded as a recovery in global share prices lifted confidence of investors, who earlier in the week exited commodities to avoid risks.
European shares reversed their gains after China's central bank said it would raise its reserve requirements and the U.S. current account deficit narrowed more than expected.
But traders said there was no impact of China news on precious metal prices.
"Overall, I see precious metals to remain vulnerable in the short-term. however, I don't expect it to test new lows since physical demand and bargain-hunting should provide some support," said another European dealer.
Gold came under some pressure in late trade as the dollar, after falling earlier, steadied. Oil eased after some gains.
Gold is often viewed as an alternative investment to dollar and a hedge against inflation.
"It's (gold) vulnerable to any deterioration in sentiment towards global asset markets. The world does look a calmer and happier place, but that could change very quickly," John Reade, analyst at UBS Investment Bank, said.
In other precious metals, silver (XAG=) advanced as high as $10.35 an ounce before falling to $10.05/$10.15, compared with $10.00/10.10 late in New York.
Platinum (XPT=) fell to $1,157/1,163 an ounce from $1,160/1,170, while palladium (XPD=) rose to $301/309, compared with $295/$300 in the U.S. market.
Gold remained under threat and may slip, as people were not yet convinced the recent downtrend is over, analysts said.
"The majority of trading has been done this week. I think we will have a quiet close to the week," said a precious metals trader in London.
"We were nervously bullish this morning. Since then it has come down but we are still up," he added.
Gold (XAU=) rose as high as $585.00 an ounce before easing to $574.30/575.00 by 1352 GMT, against $566.50/$567.50 in late New York on Thursday, when it jumped as much as three percent.
Gold rebounded as a recovery in global share prices lifted confidence of investors, who earlier in the week exited commodities to avoid risks.
European shares reversed their gains after China's central bank said it would raise its reserve requirements and the U.S. current account deficit narrowed more than expected.
But traders said there was no impact of China news on precious metal prices.
"Overall, I see precious metals to remain vulnerable in the short-term. however, I don't expect it to test new lows since physical demand and bargain-hunting should provide some support," said another European dealer.
Gold came under some pressure in late trade as the dollar, after falling earlier, steadied. Oil eased after some gains.
Gold is often viewed as an alternative investment to dollar and a hedge against inflation.
"It's (gold) vulnerable to any deterioration in sentiment towards global asset markets. The world does look a calmer and happier place, but that could change very quickly," John Reade, analyst at UBS Investment Bank, said.
In other precious metals, silver (XAG=) advanced as high as $10.35 an ounce before falling to $10.05/$10.15, compared with $10.00/10.10 late in New York.
Platinum (XPT=) fell to $1,157/1,163 an ounce from $1,160/1,170, while palladium (XPD=) rose to $301/309, compared with $295/$300 in the U.S. market.
Gold Prices Rebound From Longest Slide in Almost Two Years
June 16 -- Gold rebounded from the longest slump in almost two years on demand from investors seeking returns unavailable in the stock and bond markets.
Gold before today fell for seven sessions in a row, tumbling 23 percent from a 26-year high of $732 an ounce in mid-May. The 14- day relative-strength index fell below 30 in the past two days, a signal the metal may rise. Gold has gained 9.9 percent this year, while the Standard & Poor's 500 Index fell 0.2 percent, and holders of the benchmark 10-year U.S. Treasury lost 3.6 percent.
``You've got people who've seen this market break more than $100 in a month, and that can be the basis for a recovery,'' said Stephen Platt, a commodities analyst at Archer Financial Services Inc. in Chicago. ``I'm not a seller down here.''
Gold futures for August delivery rose $3.80, or 0.7 percent, to $570.30 an ounce on the Comex division of the New York Mercantile Exchange. The seven-session slide was the longest since July 2004. The metal still is down 6.9 percent this week.
Gold for immediate delivery rose $9.50, or 1.7 percent, to $569.25 an ounce at 2:04 p.m. New York time.
``Gold was oversold, and the market may be finding the level to settle at, and it could then move a bit higher,'' said Alastair McIntyre, head of marketing at ScotiaMocatta in Hong Kong.
A weaker dollar also helped boost gold prices. The metal traditionally moves in the opposite direction of the U.S. currency. The dollar has fallen 5.6 percent this year against a basket of six major currencies.
The dollar fell after the Treasury Department said foreign investors purchased a net $46.7 billion of U.S. stocks and bonds in April, less than the $63.4 billion trade shortfall for that month.
Dollar Correlation
``The correlation between the dollar and gold seems to be more important now,'' said David Gornall, head of foreign exchange and bullion at Natexis Commodity Markets Ltd. in London.
About 8 percent of central banks polled in an annual UBS AG survey said they are planning to diversify foreign-exchange reserves away from U.S. government debt into gold.
``This is the first time that central banks have shown an inclination to buy gold for diversification purposes,'' UBS analyst John Reade in a report.
Lower prices may also draw jewelers, who accounted for about 73 percent of purchases last year. Global gold demand dropped 16 percent in the first quarter as higher prices deterred purchases by jewelers, according to the producer-funded World Gold Council.
``We're starting to see physical demand kick in,'' said Jeremy Charles, head of precious metals in London for HSBC Bank USA. Gold may rebound to $625 an ounce in as little as two months, he said.
Some gold investors, undeterred by the metal's drop in the past month, have increased have their holdings of bullion-backed securities, indicating they expect prices to rebound.
Exchange Traded Gold
Exchange Traded Gold, which manages gold-backed securities, had 452 metric tons of gold under management as of yesterday, compared with 443 tons on June 1, said Simon Village, principal of the London-based company. Its gold-backed securities trade on exchanges in the U.S., the U.K., Australia, France and South Africa.
``If they were going to bolt, they'd have done it at a higher level, when it started to fall,'' Village said. ``Gold's got a second wind coming.''
Silver futures for July delivery rose 23.5 cents, or 2.4 percent, to $9.97 an ounce on the Comex. Prices have gained 12 percent this year.
A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
June 16 -- Gold rebounded from the longest slump in almost two years on demand from investors seeking returns unavailable in the stock and bond markets.
Gold before today fell for seven sessions in a row, tumbling 23 percent from a 26-year high of $732 an ounce in mid-May. The 14- day relative-strength index fell below 30 in the past two days, a signal the metal may rise. Gold has gained 9.9 percent this year, while the Standard & Poor's 500 Index fell 0.2 percent, and holders of the benchmark 10-year U.S. Treasury lost 3.6 percent.
``You've got people who've seen this market break more than $100 in a month, and that can be the basis for a recovery,'' said Stephen Platt, a commodities analyst at Archer Financial Services Inc. in Chicago. ``I'm not a seller down here.''
Gold futures for August delivery rose $3.80, or 0.7 percent, to $570.30 an ounce on the Comex division of the New York Mercantile Exchange. The seven-session slide was the longest since July 2004. The metal still is down 6.9 percent this week.
Gold for immediate delivery rose $9.50, or 1.7 percent, to $569.25 an ounce at 2:04 p.m. New York time.
``Gold was oversold, and the market may be finding the level to settle at, and it could then move a bit higher,'' said Alastair McIntyre, head of marketing at ScotiaMocatta in Hong Kong.
A weaker dollar also helped boost gold prices. The metal traditionally moves in the opposite direction of the U.S. currency. The dollar has fallen 5.6 percent this year against a basket of six major currencies.
The dollar fell after the Treasury Department said foreign investors purchased a net $46.7 billion of U.S. stocks and bonds in April, less than the $63.4 billion trade shortfall for that month.
Dollar Correlation
``The correlation between the dollar and gold seems to be more important now,'' said David Gornall, head of foreign exchange and bullion at Natexis Commodity Markets Ltd. in London.
About 8 percent of central banks polled in an annual UBS AG survey said they are planning to diversify foreign-exchange reserves away from U.S. government debt into gold.
``This is the first time that central banks have shown an inclination to buy gold for diversification purposes,'' UBS analyst John Reade in a report.
Lower prices may also draw jewelers, who accounted for about 73 percent of purchases last year. Global gold demand dropped 16 percent in the first quarter as higher prices deterred purchases by jewelers, according to the producer-funded World Gold Council.
``We're starting to see physical demand kick in,'' said Jeremy Charles, head of precious metals in London for HSBC Bank USA. Gold may rebound to $625 an ounce in as little as two months, he said.
Some gold investors, undeterred by the metal's drop in the past month, have increased have their holdings of bullion-backed securities, indicating they expect prices to rebound.
Exchange Traded Gold
Exchange Traded Gold, which manages gold-backed securities, had 452 metric tons of gold under management as of yesterday, compared with 443 tons on June 1, said Simon Village, principal of the London-based company. Its gold-backed securities trade on exchanges in the U.S., the U.K., Australia, France and South Africa.
``If they were going to bolt, they'd have done it at a higher level, when it started to fall,'' Village said. ``Gold's got a second wind coming.''
Silver futures for July delivery rose 23.5 cents, or 2.4 percent, to $9.97 an ounce on the Comex. Prices have gained 12 percent this year.
A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
Thursday, June 15, 2006
Gold advances on follow-up buying, Tokyo rises
16/6/2006 Sydney, Australia
TOKYO, June 16 - Gold rose on Friday on follow-through short-covering after the metal posted a strong recovery in U.S. trade, with sharp gains in Tokyo futures also helping provide overall support.
-- At 0026 GMT, spot gold (XAU=) was trading at $576.00/$578.00 an ounce, up from $566.50/$567.50 in late New York on Thursday.
-- Key most-distant April gold futures on the Tokyo Commodity Exchange (0#JAU:) opened at 2,174 yen a gram, up 46 yen or 2.2 percent from Thursday's close of 2,128 yen.
-- A weaker dollar and rising oil price lifted gold on Thursday, as some traders turned to the metal due to its role as a perceived currency alternative and inflation hedge.
-- Traders also bought back gold to adjust their positions ahead of the weekend following a steep selloff this week.
-- Spot gold is expected to find support at its 200-day moving average (MA) of around $547, while resistance is seen around $585, its 7-day MA.
-- Silver (XAG=) advanced to $10.20/$10.30 an ounce from $10.00/10.10 late in New York.
-- Platinum (XPT=) edged down to $1,155/1,162 an ounce from $1,160/1,170 in New York.
-- Sister metal palladium (XPD=) rose slightly to $297/$303 compared with $295/$300 in New York.
16/6/2006 Sydney, Australia
TOKYO, June 16 - Gold rose on Friday on follow-through short-covering after the metal posted a strong recovery in U.S. trade, with sharp gains in Tokyo futures also helping provide overall support.
-- At 0026 GMT, spot gold (XAU=) was trading at $576.00/$578.00 an ounce, up from $566.50/$567.50 in late New York on Thursday.
-- Key most-distant April gold futures on the Tokyo Commodity Exchange (0#JAU:) opened at 2,174 yen a gram, up 46 yen or 2.2 percent from Thursday's close of 2,128 yen.
-- A weaker dollar and rising oil price lifted gold on Thursday, as some traders turned to the metal due to its role as a perceived currency alternative and inflation hedge.
-- Traders also bought back gold to adjust their positions ahead of the weekend following a steep selloff this week.
-- Spot gold is expected to find support at its 200-day moving average (MA) of around $547, while resistance is seen around $585, its 7-day MA.
-- Silver (XAG=) advanced to $10.20/$10.30 an ounce from $10.00/10.10 late in New York.
-- Platinum (XPT=) edged down to $1,155/1,162 an ounce from $1,160/1,170 in New York.
-- Sister metal palladium (XPD=) rose slightly to $297/$303 compared with $295/$300 in New York.
Gold Investors Bet on Price Recovery, Buy Gold-Backed Shares
June 15 -- Gold investors, undeterred by the metal's 22 percent drop in a month, increased their holdings of bullion-backed securities in the past two weeks, indicating they expect prices to rebound.
Exchange Traded Gold, which manages gold-backed securities, had 452 metric tons of gold under management as of yesterday, compared with 443 tons on June 1, Simon Village, principal of the London-based company said in an interview. Its gold-backed securities trade on exchanges in the U.S., the U.K., Australia, France and South Africa.
``If they were going to bolt, they'd have done it at a higher level, when it started to fall,'' Village said in the interview from London. ``Gold's got a second wind coming.''
Gold, which closed at $559.75 an ounce yesterday, has declined from a 26-year high of $730.40 on May 12. Prices have dropped on concern that higher interest rates will erode the appeal of gold as an alternative to stocks and bonds. Gold may rebound to as much as $700 by the end of the year, Village said.
Gold has gained for five consecutive years, the longest winning streak since the 1970s, on expectations the dollar will weaken. Some investors buy gold as a hedge against declines in the dollar. The metal has also been buoyed by increased demand from the Middle East, where consumers are benefiting from record crude oil prices.
Those factors will reassert themselves in the next several months, Village said. Jewelers and investors, particularly central banks and those flush with ``petrodollars,'' will help drive prices higher, he added.
Bank Vault
Gold-backed securities represent one 10th of an ounce of gold, and Exchange Traded Gold stores the metal in a bank vault. Private investors hold about half its shares, with the remainder held by money managers.
Streettracks Gold Shares, which trade on the New York Stock Exchange, account for about 79 percent of the company's bullion under management. Exchange Traded Gold says it controls about 92 percent of the world's market in gold-backed securities.
Village is a former director of the World Gold Council and managing director of HSBC Holdings Plc's South African unit.
Gold for immediate delivery rose $16.30 an ounce, or 2.9 percent, to $576.05 as of 10:48 a.m. in London.
June 15 -- Gold investors, undeterred by the metal's 22 percent drop in a month, increased their holdings of bullion-backed securities in the past two weeks, indicating they expect prices to rebound.
Exchange Traded Gold, which manages gold-backed securities, had 452 metric tons of gold under management as of yesterday, compared with 443 tons on June 1, Simon Village, principal of the London-based company said in an interview. Its gold-backed securities trade on exchanges in the U.S., the U.K., Australia, France and South Africa.
``If they were going to bolt, they'd have done it at a higher level, when it started to fall,'' Village said in the interview from London. ``Gold's got a second wind coming.''
Gold, which closed at $559.75 an ounce yesterday, has declined from a 26-year high of $730.40 on May 12. Prices have dropped on concern that higher interest rates will erode the appeal of gold as an alternative to stocks and bonds. Gold may rebound to as much as $700 by the end of the year, Village said.
Gold has gained for five consecutive years, the longest winning streak since the 1970s, on expectations the dollar will weaken. Some investors buy gold as a hedge against declines in the dollar. The metal has also been buoyed by increased demand from the Middle East, where consumers are benefiting from record crude oil prices.
Those factors will reassert themselves in the next several months, Village said. Jewelers and investors, particularly central banks and those flush with ``petrodollars,'' will help drive prices higher, he added.
Bank Vault
Gold-backed securities represent one 10th of an ounce of gold, and Exchange Traded Gold stores the metal in a bank vault. Private investors hold about half its shares, with the remainder held by money managers.
Streettracks Gold Shares, which trade on the New York Stock Exchange, account for about 79 percent of the company's bullion under management. Exchange Traded Gold says it controls about 92 percent of the world's market in gold-backed securities.
Village is a former director of the World Gold Council and managing director of HSBC Holdings Plc's South African unit.
Gold for immediate delivery rose $16.30 an ounce, or 2.9 percent, to $576.05 as of 10:48 a.m. in London.
Wednesday, June 14, 2006
Gold Falls, Matching Longest Slide Since 2004, on Rate Concern
June 14 -- Gold fell for a seventh session, matching the longest slide since July 2004, on concern the Federal Reserve will continue to raise interest rates, eroding the appeal of gold as an alternative to U.S. stocks and bonds.
The metal has plunged 13 percent since June 2 and is down 23 percent from a 26-year high last month as the Fed signaled it may raise the benchmark rate from 5 percent to curb inflation. Fed Bank of Dallas President Richard Fisher today said policy makers must be ``relentlessly bird-dogging inflation'' after consumer prices in May rose more than expected.
``As long as we continue to see inflation, the Fed is going to continue raising rates,'' said Leonard Kaplan, President of Prospector Asset Management in Evanston, Illinois. ``Money will fly in from the moon for anything over 5 percent. There's no reason to hold gold. The market isn't done on the downside.''
Gold futures for August delivery fell 30 cents to $566.50 an ounce on the Comex division of the New York Mercantile Exchange, after earlier reaching $546.40, the lowest since March. Prices fell another $9 in after-hours trading to $557.50.
Higher borrowing costs make holding gold less attractive because the metal has no fixed returns, unlike bonds. Holders of U.S. Treasuries have gained about 1.4 percent this past month while gold has fallen 17 percent.
The Fed has lifted borrowing costs 16 times since June 2004, to 5 percent. Futures traders are pricing in a 100 percent chance the Fed will raise its benchmark interest rate a quarter- percentage point to 5.25 percent at the June 28-29 meeting of the Federal Open Market Committee, which sets rates. The odds were 90 percent yesterday. The chances of an August increase are about 40 percent.
Prices Fluctuations
Gold's recent price fluctuations have also deterred some buyers. From the start of the year to mid-May, gold jumped 39 percent as pension funds diversified into commodities and individuals piled into exchanged-traded funds.
The StreetTracks Gold Trust, a fund linked to the price of gold, has lost $1.7 billion in value from its record of $8.2 billion last month. The fund began trading in November 2004.
``I really need to see a second test of the lows,'' said Frank McGhee, head metals trader at Integrated Brokerage Services LLC in Chicago. ``I'm looking to be a buyer, but I'm not quite there yet.''
Gold rose to $575.50 earlier in the day, as some investors saw the lowest prices since March as an opportunity to buy. Yesterday's 7.3 percent decline was the most since gold dropped 7.4 percent on Jan. 17, 1991.
Safe to Buy
``The water is now safe once again to enter,'' Dennis Gartman, a gold trader, economist, and editor of the Suffolk, Virginia-based Gartman Letter, said in his daily report. ``Those not long of gold should be long and those long of it should be longer.''
The 14-day relative strength index on gold futures, a gauge of the momentum for the metal's gains or losses, fell to 27.25 yesterday, the lowest since July 14, 1997. It was the first time the index had fallen below 30 since May 2004. A reading below 30, which is derived from averaging gains or losses over 14 days, indicates prices are poised to rise.
``This sell-off is so exaggerated,'' said John Licata, chief investment strategist at Blue Phoenix Inc., an energy and precious-metals consulting firm in New York. ``This sell-off yesterday was another great buying opportunity for patient investors.''
A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
June 14 -- Gold fell for a seventh session, matching the longest slide since July 2004, on concern the Federal Reserve will continue to raise interest rates, eroding the appeal of gold as an alternative to U.S. stocks and bonds.
The metal has plunged 13 percent since June 2 and is down 23 percent from a 26-year high last month as the Fed signaled it may raise the benchmark rate from 5 percent to curb inflation. Fed Bank of Dallas President Richard Fisher today said policy makers must be ``relentlessly bird-dogging inflation'' after consumer prices in May rose more than expected.
``As long as we continue to see inflation, the Fed is going to continue raising rates,'' said Leonard Kaplan, President of Prospector Asset Management in Evanston, Illinois. ``Money will fly in from the moon for anything over 5 percent. There's no reason to hold gold. The market isn't done on the downside.''
Gold futures for August delivery fell 30 cents to $566.50 an ounce on the Comex division of the New York Mercantile Exchange, after earlier reaching $546.40, the lowest since March. Prices fell another $9 in after-hours trading to $557.50.
Higher borrowing costs make holding gold less attractive because the metal has no fixed returns, unlike bonds. Holders of U.S. Treasuries have gained about 1.4 percent this past month while gold has fallen 17 percent.
The Fed has lifted borrowing costs 16 times since June 2004, to 5 percent. Futures traders are pricing in a 100 percent chance the Fed will raise its benchmark interest rate a quarter- percentage point to 5.25 percent at the June 28-29 meeting of the Federal Open Market Committee, which sets rates. The odds were 90 percent yesterday. The chances of an August increase are about 40 percent.
Prices Fluctuations
Gold's recent price fluctuations have also deterred some buyers. From the start of the year to mid-May, gold jumped 39 percent as pension funds diversified into commodities and individuals piled into exchanged-traded funds.
The StreetTracks Gold Trust, a fund linked to the price of gold, has lost $1.7 billion in value from its record of $8.2 billion last month. The fund began trading in November 2004.
``I really need to see a second test of the lows,'' said Frank McGhee, head metals trader at Integrated Brokerage Services LLC in Chicago. ``I'm looking to be a buyer, but I'm not quite there yet.''
Gold rose to $575.50 earlier in the day, as some investors saw the lowest prices since March as an opportunity to buy. Yesterday's 7.3 percent decline was the most since gold dropped 7.4 percent on Jan. 17, 1991.
Safe to Buy
``The water is now safe once again to enter,'' Dennis Gartman, a gold trader, economist, and editor of the Suffolk, Virginia-based Gartman Letter, said in his daily report. ``Those not long of gold should be long and those long of it should be longer.''
The 14-day relative strength index on gold futures, a gauge of the momentum for the metal's gains or losses, fell to 27.25 yesterday, the lowest since July 14, 1997. It was the first time the index had fallen below 30 since May 2004. A reading below 30, which is derived from averaging gains or losses over 14 days, indicates prices are poised to rise.
``This sell-off is so exaggerated,'' said John Licata, chief investment strategist at Blue Phoenix Inc., an energy and precious-metals consulting firm in New York. ``This sell-off yesterday was another great buying opportunity for patient investors.''
A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
Gold rebounds from heavy fall after dollar weakness
Wed Jun 14, 2006 4:46 PM GMT
LONDON - Gold bounced back in European trade on Wednesday after slipping to a three-month low in Asia as dollar weakness attracted bargain-hunters, dealers said.
But gold's sharp fall of 26 percent from its 26-year peak of $730 an ounce hit a month ago had made market players cautious and bullion dealers remained on edge.
"We see some signs of consumers coming in under the market, but nothing sizeable enough to hold back the market in the face of further speculative selling," said a metals dealer in London.
"We will see a continuation of a downward trend overall, but may be not so much as the pace yesterday," the trader said.
Spot gold briefly fell to a three-month low of $543 an ounce before rising to $571.10. Prices were indicated at $569.50/570.50 by 1436 GMT, up from $562.00/562.70 late in New York on Tuesday, when the price fell by more than seven percent.
Tuesday's drop was one of the largest intra-day falls.
The euro was indicated at $1.2630 by 1349 GMT, against $1.2543 in New York late on Tuesday.
A weaker dollar makes gold cheaper for holders of other currencies and prompts some investors to shift to safe-haven assets from other markets for better returns.
"Overnight stabilisation in other asset markets has clearly helped sentiment towards precious metals," said John Reade, precious metals analyst at UBS Investment Bank.
"But after recent losses in risk markets we suspect it is too soon to call an end to the sell-off in gold as there are potentially lots of external factors that could rattle investor sentiment," he said.
SHAKY GROUND
Analysts said precious metals remained vulnerable to further selling by investors trying to shift out of commodities.
UBS saw gold at $550 in one month and $580 in three months, down from its earlier estimate of $630 and $650 respectively. It lowered its forecast for silver to $9.00 and $10 for one month and three months from $12.00 and $12.50.
"Previously when we saw a major correction, gold always came back strongly, but investors will be more careful this time about taking positions in gold again," Shuji Sugata, assistant manager at Mitsubishi Corporation Futures and Securities, said.
"It may take a while before the market can fully regain confidence."
In other markets, copper rebounded on bargain hunting, recovering from Wednesday's early sell-off.
Silver fell as low as $9.38 an ounce, down 38 percent from last month's 25-year high of $15.17. It was last quoted at $9.86/9.96, versus $9.56/9.66 late in New York.
Platinum was at $1,133/1,140 an ounce after falling to $1,090, compared with $1,116/1,120 in New York. Palladium was at $282/289 an ounce from $272/277.
Wed Jun 14, 2006 4:46 PM GMT
LONDON - Gold bounced back in European trade on Wednesday after slipping to a three-month low in Asia as dollar weakness attracted bargain-hunters, dealers said.
But gold's sharp fall of 26 percent from its 26-year peak of $730 an ounce hit a month ago had made market players cautious and bullion dealers remained on edge.
"We see some signs of consumers coming in under the market, but nothing sizeable enough to hold back the market in the face of further speculative selling," said a metals dealer in London.
"We will see a continuation of a downward trend overall, but may be not so much as the pace yesterday," the trader said.
Spot gold briefly fell to a three-month low of $543 an ounce before rising to $571.10. Prices were indicated at $569.50/570.50 by 1436 GMT, up from $562.00/562.70 late in New York on Tuesday, when the price fell by more than seven percent.
Tuesday's drop was one of the largest intra-day falls.
The euro was indicated at $1.2630 by 1349 GMT, against $1.2543 in New York late on Tuesday.
A weaker dollar makes gold cheaper for holders of other currencies and prompts some investors to shift to safe-haven assets from other markets for better returns.
"Overnight stabilisation in other asset markets has clearly helped sentiment towards precious metals," said John Reade, precious metals analyst at UBS Investment Bank.
"But after recent losses in risk markets we suspect it is too soon to call an end to the sell-off in gold as there are potentially lots of external factors that could rattle investor sentiment," he said.
SHAKY GROUND
Analysts said precious metals remained vulnerable to further selling by investors trying to shift out of commodities.
UBS saw gold at $550 in one month and $580 in three months, down from its earlier estimate of $630 and $650 respectively. It lowered its forecast for silver to $9.00 and $10 for one month and three months from $12.00 and $12.50.
"Previously when we saw a major correction, gold always came back strongly, but investors will be more careful this time about taking positions in gold again," Shuji Sugata, assistant manager at Mitsubishi Corporation Futures and Securities, said.
"It may take a while before the market can fully regain confidence."
In other markets, copper rebounded on bargain hunting, recovering from Wednesday's early sell-off.
Silver fell as low as $9.38 an ounce, down 38 percent from last month's 25-year high of $15.17. It was last quoted at $9.86/9.96, versus $9.56/9.66 late in New York.
Platinum was at $1,133/1,140 an ounce after falling to $1,090, compared with $1,116/1,120 in New York. Palladium was at $282/289 an ounce from $272/277.
Tuesday, June 13, 2006
NY gold ends at lowest since March after sell-off
Tue Jun 13, 2006 6:21 PM ET
NEW YORK - Gold futures in New York plummeted 7.3 percent to close well below $600 an ounce on Tuesday, pressured by aggressive selling due to stronger dollar, soft oil price and concerns over interest rate hikes.
Silver tanked 13 percent and dropped below $10 an ounce as speculative liquidation pummeled the precious and base metals, and platinum and palladium futures also tumbled.
Stop-loss selling hammered gold after the market retreated below first $600 and then $590, which were recent trend-line support levels, said trading sources.
"It was all margin selling and liquidation by the funds," said George Gero, vice president at RBC Capital Markets Global Futures. "No buyers appeared until the market was $40 down."
August delivery gold was down $44.50, or 7.3 percent, to end at $566.80 an ounce on the New York Mercantile Exchange's COMEX division, dealing between $611.70 and $565.50 -- its cheapest level since March 24.
Gold accelerated losses after overnight falls in Asia and Europe, after the dollar climbed anew as the core U.S. producer price index for May rose faster than economists had expected.
Investors' aversion to risk and a desire for liquidity were weighing on many financial markets on Tuesday, analysts said.
"Fund dealer and investors liquidation" intensified after the New York open, said James Moore, analyst with TheBullionDesk.
Gold "needs to stabilize in order to renew investor confidence in the market or else run the risk of freefall back to the $500 to $480 area," he said.
COMEX gold rose to $732 in mid-May, its priciest since 1980, before it began its one-month slide. Analysts said investors are reluctant to build positions now amid the extreme price volatility and limited consumer demand for metal.
A higher-than-expected May core producer prices reading underscored worries about inflation and reinforced ideas of a Federal Reserve interest rate hike at the end of this month.
U.S. May core producer prices, which exclude food and energy, rose 0.3 percent, above economists' forecasts for a rise of 0.2 percent.
Another government report said retail sales rose 0.1 percent in May from a 0.5 percent rise in April, as expected.
"We believe that investors are showing signs that they are most concerned about over-aggressive central bank rate hikes triggering a growth slowdown," said UBS analyst John Reade in a daily note.
"Fears of a growth shock has knocked equities, emerging markets and commodities - including gold ... With a heavy data and comment calendar out of the U.S. this week, we expect further volatility and likely further near term declines in precious and base metals prices," Reade said.
Spot gold dropped to $562.00/562.70 an ounce, way down from Monday's New York close at $605.60/6.30. Tuesday's afternoon bullion fix in London was at $586.50.
The dollar hit new one-month highs against the euro and yen Tuesday. Gold has a tight inverse relationship with the U.S. currency as investors often use the metal as a dollar alternative.
Oil fell sharply, echoing similar moves across commodities and stocks. The fact that Tropical Storm Alberto, the first of the U.S. hurricane season, was forecast to miss oil and gas infrastructure, also pressured prices.
COMEX July silver fell to as low as $9.60 an ounce to post a near three-month low, before it edged to $9.6250, off 13 percent or 144 cents. The day's high was $11.0850.
Spot silver sank to $9.56/9.66 an ounce, against $11.03/11.13 previously. Silver fixed at $10.47.
At NYMEX, July platinum was down $52.90 or 4.5 percent at $1,118.50 an ounce, after it hit a six-week low at $1,115.50. Spot platinum last traded at $1,116/1,120.
Thinly traded September palladium tanked $39.05 or 12.4 percent to close at $272.70 an ounce, near a fresh three-month low of $274.10. Spot palladium fell to $272/277.
Tue Jun 13, 2006 6:21 PM ET
NEW YORK - Gold futures in New York plummeted 7.3 percent to close well below $600 an ounce on Tuesday, pressured by aggressive selling due to stronger dollar, soft oil price and concerns over interest rate hikes.
Silver tanked 13 percent and dropped below $10 an ounce as speculative liquidation pummeled the precious and base metals, and platinum and palladium futures also tumbled.
Stop-loss selling hammered gold after the market retreated below first $600 and then $590, which were recent trend-line support levels, said trading sources.
"It was all margin selling and liquidation by the funds," said George Gero, vice president at RBC Capital Markets Global Futures. "No buyers appeared until the market was $40 down."
August delivery gold
Gold accelerated losses after overnight falls in Asia and Europe, after the dollar climbed anew as the core U.S. producer price index for May rose faster than economists had expected.
Investors' aversion to risk and a desire for liquidity were weighing on many financial markets on Tuesday, analysts said.
"Fund dealer and investors liquidation" intensified after the New York open, said James Moore, analyst with TheBullionDesk.
Gold "needs to stabilize in order to renew investor confidence in the market or else run the risk of freefall back to the $500 to $480 area," he said.
COMEX gold rose to $732 in mid-May, its priciest since 1980, before it began its one-month slide. Analysts said investors are reluctant to build positions now amid the extreme price volatility and limited consumer demand for metal.
A higher-than-expected May core producer prices reading underscored worries about inflation and reinforced ideas of a Federal Reserve interest rate hike at the end of this month.
U.S. May core producer prices, which exclude food and energy, rose 0.3 percent, above economists' forecasts for a rise of 0.2 percent.
Another government report said retail sales rose 0.1 percent in May from a 0.5 percent rise in April, as expected.
"We believe that investors are showing signs that they are most concerned about over-aggressive central bank rate hikes triggering a growth slowdown," said UBS analyst John Reade in a daily note.
"Fears of a growth shock has knocked equities, emerging markets and commodities - including gold ... With a heavy data and comment calendar out of the U.S. this week, we expect further volatility and likely further near term declines in precious and base metals prices," Reade said.
Spot gold
The dollar hit new one-month highs against the euro and yen Tuesday. Gold has a tight inverse relationship with the U.S. currency as investors often use the metal as a dollar alternative.
Oil fell sharply, echoing similar moves across commodities and stocks. The fact that Tropical Storm Alberto, the first of the U.S. hurricane season, was forecast to miss oil and gas infrastructure, also pressured prices.
COMEX July silver
Spot silver
At NYMEX, July platinum
Thinly traded September palladium
Gold futures tumbled below $600 an ounce on Tuesday morning for the first time in two months, due to a rising dollar and weakness in stock and oil markets.
In morning trading, August gold was down $19.30 to $592 an ounce on the New York Mercantile Exchange.
The contract fell as far $585.50 an ounce, its weakest level since March 30. At the low, the metal had given up $153.70, or 21 percent of its value, since its contract high of $739.20 an ounce on May 12.
July silver lost 66.5 cents to $10.40. It went as low as $10.27 an ounce, its weakest level since March 21. At the low, it had given up $4.93, or 32 percent of its value, since its contract high of $15.20 an ounce on May 11.
"They are down on continuing strength in the dollar and they are moving lower with the equity markets as well," said Frank Lesh, analyst and broker with Future Path Trading.
Sell stops were triggered in both gold and silver, Lesh said.
The euro has slipped as far as $1.2550, its weakest level against the U.S. dollar since April 28. It has now fallen nearly four full pennies since the beginning of last week, when Federal Reserve comments about inflation prompted a recovery in the dollar.
Analysts with Barclays also cited continued weakness in crude oil as a factor pressuring the metals. July crude has lost $1.06 to $69.30 a barrel.
There was limited effect on the metals market from a pair of closely watched economic reports, as most of the selling pressure occurred overnight, said Lesh. The markets got a Producer Price Index that was mixed relative to expectations and a retail sales report was in line or fractionally higher than forecasts.
"We got a little bit of a bounce, but not much," Lesh said.
In morning trading, August gold was down $19.30 to $592 an ounce on the New York Mercantile Exchange.
The contract fell as far $585.50 an ounce, its weakest level since March 30. At the low, the metal had given up $153.70, or 21 percent of its value, since its contract high of $739.20 an ounce on May 12.
July silver lost 66.5 cents to $10.40. It went as low as $10.27 an ounce, its weakest level since March 21. At the low, it had given up $4.93, or 32 percent of its value, since its contract high of $15.20 an ounce on May 11.
"They are down on continuing strength in the dollar and they are moving lower with the equity markets as well," said Frank Lesh, analyst and broker with Future Path Trading.
Sell stops were triggered in both gold and silver, Lesh said.
The euro has slipped as far as $1.2550, its weakest level against the U.S. dollar since April 28. It has now fallen nearly four full pennies since the beginning of last week, when Federal Reserve comments about inflation prompted a recovery in the dollar.
Analysts with Barclays also cited continued weakness in crude oil as a factor pressuring the metals. July crude has lost $1.06 to $69.30 a barrel.
There was limited effect on the metals market from a pair of closely watched economic reports, as most of the selling pressure occurred overnight, said Lesh. The markets got a Producer Price Index that was mixed relative to expectations and a retail sales report was in line or fractionally higher than forecasts.
"We got a little bit of a bounce, but not much," Lesh said.
Monday, June 12, 2006
Gold futures fell Monday to mark a five-session losing streak and close at a two-month low with U.S. inflation data due this week expected to support the case for the Federal Reserve to continue raising interest rates.
The gold market shows a weak tone as traders "await the publication of a key series of health readings on the state of the U.S. economy," said Jon Nadler, an investment products analyst at bullion dealers Kitco.com
The likelihood of a "sub-$600 dip this week remains very much in place, and some nerves may be tested before Friday rolls around," he warned.
For now, support for gold will likely be strong around $600, with technical support between $585-$578 "likely to hold, barring any extremely bearish news," James Moore, an analyst at TheBullionDesk.com, said in a note to clients Monday.
Gold for August delivery closed down $1.50 at $611.30 an ounce, after falling as low as $605 in electronic trading. Those are its weakest intraday and closing levels since April 13. On Friday, the contract closed out the week down 4.4%.
"As before, the firmer dollar and concerns about a combination of slowing U.S. growth and further Fed tightening are likely to keep gold and other commodity prices pressured," said economists at research firm Action Economics.
The dollar touched a six-week high against the euro on growing expectations the Fed will continue to raise interest rates. See Currencies.
On the supply side, gold inventories were down 261 troy ounces at 7.79 million troy ounces as of late Friday, according to data from the New York Mercantile Exchange.
Silver was down 409,496 troy ounces at 105.4 million, and copper supplies fell 21 short tons to 8,930 short tons.
Elsewhere in metals trading, silver for July delivery finished down 14.5 cents at $11.065 an ounce, falling to a low under $11 for the first time since late March.
July platinum lost $18.80 to end at $1,171.40 an ounce and September palladium lost $9.80 to close at $315.75 an ounce.
July copper shed 3.9 cents to close at $3.2285 a pound after trading as high as $3.335 in New York. The metal lost as much as 4% during morning trading in London to mark a seven-week low.
Consolidation nears an end?
Julian Phillips, an analyst at GoldForecaster.com believes that the gold market is "in the process of completing its consolidation process."
But "there is still room for another dip to below $600, as buyers stand quietly on the sidelines waiting for the right price," he said.
He points out that "the fall from the peak gold price of late, has been the dominance of the funds as sellers," and "they have lowered their net speculative positions to close to the lows of the past few years, leading us to believe the selling will soon be exhausted."
Meanwhile, Fed Chairman Ben Bernanke is scheduled to make three appearances this week. After hawkish comments on inflation last week, the markets are fully expecting the Fed to raise interest rates for a 17th straight time at its June 29 meeting.
Outside of the U.S., Iran over the weekend reiterated that it will not engage in negotiations over its right to enrich uranium, according to the BBC.
"We have obtained this technology, it is our obvious right and we do not negotiate over our obvious nuclear rights," government spokesman Gholamhossein Elham said.
"News that Iran has now basically said: 'thanks, but no thanks!' to the package of incentives it has been offered, had the more apprehensive contingent of the gold-trading crowd checking the 'buy' column of their trading logs," said Nadler.
Elham's comments came after a report late last week suggested the world's fourth-biggest oil producer has accelerated its uranium-enrichment program at a time when western governments are offering special incentives to slow things down.
Shares of Toronto-based Crystallex International Corp. tumbled 21% to close at $3.04 after a Venezuelan national assemblyman said the country may try to gain majority control in mining ventures under proposed changes to law that regulate gold and mineral extraction, according to Bloomberg.
Crystallex has exclusive rights to develop the Las Cristinas deposit in Venezuela, one of the largest undeveloped gold deposits in the world. In May, Venezuela's mining minister said it will renegotiate mining agreements with both foreign and domestic companies.
The gold market shows a weak tone as traders "await the publication of a key series of health readings on the state of the U.S. economy," said Jon Nadler, an investment products analyst at bullion dealers Kitco.com
The likelihood of a "sub-$600 dip this week remains very much in place, and some nerves may be tested before Friday rolls around," he warned.
For now, support for gold will likely be strong around $600, with technical support between $585-$578 "likely to hold, barring any extremely bearish news," James Moore, an analyst at TheBullionDesk.com, said in a note to clients Monday.
Gold for August delivery closed down $1.50 at $611.30 an ounce, after falling as low as $605 in electronic trading. Those are its weakest intraday and closing levels since April 13. On Friday, the contract closed out the week down 4.4%.
"As before, the firmer dollar and concerns about a combination of slowing U.S. growth and further Fed tightening are likely to keep gold and other commodity prices pressured," said economists at research firm Action Economics.
The dollar touched a six-week high against the euro on growing expectations the Fed will continue to raise interest rates. See Currencies.
On the supply side, gold inventories were down 261 troy ounces at 7.79 million troy ounces as of late Friday, according to data from the New York Mercantile Exchange.
Silver was down 409,496 troy ounces at 105.4 million, and copper supplies fell 21 short tons to 8,930 short tons.
Elsewhere in metals trading, silver for July delivery finished down 14.5 cents at $11.065 an ounce, falling to a low under $11 for the first time since late March.
July platinum lost $18.80 to end at $1,171.40 an ounce and September palladium lost $9.80 to close at $315.75 an ounce.
July copper shed 3.9 cents to close at $3.2285 a pound after trading as high as $3.335 in New York. The metal lost as much as 4% during morning trading in London to mark a seven-week low.
Consolidation nears an end?
Julian Phillips, an analyst at GoldForecaster.com believes that the gold market is "in the process of completing its consolidation process."
But "there is still room for another dip to below $600, as buyers stand quietly on the sidelines waiting for the right price," he said.
He points out that "the fall from the peak gold price of late, has been the dominance of the funds as sellers," and "they have lowered their net speculative positions to close to the lows of the past few years, leading us to believe the selling will soon be exhausted."
Meanwhile, Fed Chairman Ben Bernanke is scheduled to make three appearances this week. After hawkish comments on inflation last week, the markets are fully expecting the Fed to raise interest rates for a 17th straight time at its June 29 meeting.
Outside of the U.S., Iran over the weekend reiterated that it will not engage in negotiations over its right to enrich uranium, according to the BBC.
"We have obtained this technology, it is our obvious right and we do not negotiate over our obvious nuclear rights," government spokesman Gholamhossein Elham said.
"News that Iran has now basically said: 'thanks, but no thanks!' to the package of incentives it has been offered, had the more apprehensive contingent of the gold-trading crowd checking the 'buy' column of their trading logs," said Nadler.
Elham's comments came after a report late last week suggested the world's fourth-biggest oil producer has accelerated its uranium-enrichment program at a time when western governments are offering special incentives to slow things down.
Shares of Toronto-based Crystallex International Corp. tumbled 21% to close at $3.04 after a Venezuelan national assemblyman said the country may try to gain majority control in mining ventures under proposed changes to law that regulate gold and mineral extraction, according to Bloomberg.
Crystallex has exclusive rights to develop the Las Cristinas deposit in Venezuela, one of the largest undeveloped gold deposits in the world. In May, Venezuela's mining minister said it will renegotiate mining agreements with both foreign and domestic companies.
Sunday, June 11, 2006
Dubai exchange gold futures value up 68 pct in May
11 June 2006
DUBAI - The value of gold futures traded on Dubai’s new commodities exchange in May rose 68 percent to $1.34 billion, compared with April, the exchange said.
Dubai Gold and Commodities Exchange (DGCX) said the number of gold and silver futures contracts traded rose nearly 24 percent to 79,660 in May versus April.
The total value of gold futures traded on DGCX since its inception in Nov. 22, 2005, now stands at $3.4 billion, it said in a statement received on Sunday.
DGCX, which is planning to introduce fuel oil and steel contracts in September, will launch the Middle East’s first currency futures on Monday to tap growing demand for currency hedging in the region’s trading hub.
The deliverable euro-dollar, yen-dollar and sterling-dollar contracts will be listed on the exchange, which may introduce more contracts later.
11 June 2006
DUBAI - The value of gold futures traded on Dubai’s new commodities exchange in May rose 68 percent to $1.34 billion, compared with April, the exchange said.
Dubai Gold and Commodities Exchange (DGCX) said the number of gold and silver futures contracts traded rose nearly 24 percent to 79,660 in May versus April.
The total value of gold futures traded on DGCX since its inception in Nov. 22, 2005, now stands at $3.4 billion, it said in a statement received on Sunday.
DGCX, which is planning to introduce fuel oil and steel contracts in September, will launch the Middle East’s first currency futures on Monday to tap growing demand for currency hedging in the region’s trading hub.
The deliverable euro-dollar, yen-dollar and sterling-dollar contracts will be listed on the exchange, which may introduce more contracts later.
Saturday, June 10, 2006
Gold prices recovered some of the ground lost yesterday as bargain hunters and physical buyers came into the market.
But sentiment remained subdued in early afternoon London trading as the dollar held on to recent gains.
Spot gold was quoted at 611.80-612.50 an ounce, while spot silver was quoted at 11.19-11.29 usd. Platinum was down at 1,193-1,199 usd, while palladium fell to 315.50-321-50 usd.
Gold prices had fallen yesterday to around 603 usd an ounce, their lowest level since mid-April, as the dollar gained on what were judged rather dovish comments from the European Central Bank rates meeting, and oil prices tumbled on news of Zarqawi's death.
Spot gold is currently more than 100 usd below its 26-year-high of 730 usd an ounce hit on May 12 this year.
And base metals continued yesterday's weakness, with LME copper for three month delivery down 1.46 pct to 7,350 usd a tonne while three-month zinc fell 2.15 pct at 3,410 usd.
LME three month lead and nickel fell 1.66 pct at 1,010 usd a tonne and 4.31 pct at 20,000 usd, respectively.
The narrower-than-expected US trade deficit announced today seems set to nudge the dollar higher, according to analysts, which is likely to further dampen sentiment on gold. The dollar has been bolstered by a combination of factors ranging from expectations of higher interest rates in the US to falling risk appetites for emerging markets.
A series of hawkish comments from US rate setters this week, including from Fed chief Ben Bernanke, have driven expectations of a quarter point rate hike from the Fed on June 29.
At the same time, the fallout in emerging markets as well as commodities also helped underpin the dollar.
The G8 finance ministers meeting this weekend is predicted to reiterate concerns about global imbalances, in turn lending the US trade data added importance.
But sentiment remained subdued in early afternoon London trading as the dollar held on to recent gains.
Spot gold was quoted at 611.80-612.50 an ounce, while spot silver was quoted at 11.19-11.29 usd. Platinum was down at 1,193-1,199 usd, while palladium fell to 315.50-321-50 usd.
Gold prices had fallen yesterday to around 603 usd an ounce, their lowest level since mid-April, as the dollar gained on what were judged rather dovish comments from the European Central Bank rates meeting, and oil prices tumbled on news of Zarqawi's death.
Spot gold is currently more than 100 usd below its 26-year-high of 730 usd an ounce hit on May 12 this year.
And base metals continued yesterday's weakness, with LME copper for three month delivery down 1.46 pct to 7,350 usd a tonne while three-month zinc fell 2.15 pct at 3,410 usd.
LME three month lead and nickel fell 1.66 pct at 1,010 usd a tonne and 4.31 pct at 20,000 usd, respectively.
The narrower-than-expected US trade deficit announced today seems set to nudge the dollar higher, according to analysts, which is likely to further dampen sentiment on gold. The dollar has been bolstered by a combination of factors ranging from expectations of higher interest rates in the US to falling risk appetites for emerging markets.
A series of hawkish comments from US rate setters this week, including from Fed chief Ben Bernanke, have driven expectations of a quarter point rate hike from the Fed on June 29.
At the same time, the fallout in emerging markets as well as commodities also helped underpin the dollar.
The G8 finance ministers meeting this weekend is predicted to reiterate concerns about global imbalances, in turn lending the US trade data added importance.
Gold, silver and copper futures end the week lower
SAN FRANCISCO -- August gold fell $1 to end at $612.80 an ounce, its lowest closing level since April 13. The contract finished the week with a loss of 4.4%. July silver tacked on 13.5 cents to end at $11.21 an ounce, but still finished the week down 7.2%. July copper closed at $3.2675 a pound, down 8.95 cents for the day and down 8.9% from last Friday's closing level
SAN FRANCISCO -- August gold fell $1 to end at $612.80 an ounce, its lowest closing level since April 13. The contract finished the week with a loss of 4.4%. July silver tacked on 13.5 cents to end at $11.21 an ounce, but still finished the week down 7.2%. July copper closed at $3.2675 a pound, down 8.95 cents for the day and down 8.9% from last Friday's closing level
Friday, June 09, 2006
June 9 -- Gold headed for a fourth consecutive weekly decline, its longest losing streak in a year, as the dollar gained against the euro, making the precious metal less attractive as an alternative investment.
The dollar has gained 2 percent this week against the euro on speculation the Federal Reserve may raise interest rates for a 17th consecutive time. The European Central Bank yesterday raised its key rate a third time since December. That increase of 25 basis points to 2.75 percent was less than a 50-point boost forecast by analysts such as Kevin Gaynor at Royal Bank of Scotland Plc. in London.
``Markets are disappointed by the ECB, putting downward pressure on the euro, and gold got hit quite strongly,'' said Michael Widmer at Macquarie Bank Ltd. in London in an interview today. A speech by ECB President Jean-Claude Trichet yesterday in Madrid showed ``no strong inclination to boost rates.''
Gold for immediate delivery fell 57 cents to $612.68 an ounce at 12:23 p.m. in London. A close at that level would give bullion a weekly drop of about 4 percent.
The precious metal has declined 14 percent since trading at a 26-year high of $730.40 on May 12.
``Suddenly the market's appetite for risk has taken an about- turn,'' said Nick Moore, an analyst at ABN Amro Holding NV in London. ``Gold has been quite dramatically hit during the sell off. It is like a tide going out.''
Deficits
Still, Moore said gold may climb as U.S. trade and budget deficits weaken the dollar.
A widening U.S. deficit means more dollars need to be converted into foreign currency to pay for imports. It also indicates the dollar may need to weaken to make U.S. exports cheaper and imports more costly to close the gap.
A government report today is expected to show the U.S. trade deficit widened in April to $65 billion from $62 billion from March, according to a Bloomberg survey.
The U.S. current-account deficit, the broadest measure of trade, surpassed $800 billion in 2005 for the first time.
``Gold is a classic hedge,'' Moore said. ``Gold is being left like a jewel on the shore waiting to be picked up.''
Gold may reach $800 an ounce as the dollar weakens, he said.
The dollar traded at $1.2657 versus the euro. It's heading for the biggest weekly gain since November after Federal Reserve officials said inflation is a concern. Federal Reserve Chairman Ben S. Bernanke may reinforce the case for the bank to raise borrowing costs at a June 28-29 meeting.
Platinum rose $4.50 to $1,197.50 an ounce at 12:42 p.m. today, and silver gained 18 cents to $11.40 an ounce.
The dollar has gained 2 percent this week against the euro on speculation the Federal Reserve may raise interest rates for a 17th consecutive time. The European Central Bank yesterday raised its key rate a third time since December. That increase of 25 basis points to 2.75 percent was less than a 50-point boost forecast by analysts such as Kevin Gaynor at Royal Bank of Scotland Plc. in London.
``Markets are disappointed by the ECB, putting downward pressure on the euro, and gold got hit quite strongly,'' said Michael Widmer at Macquarie Bank Ltd. in London in an interview today. A speech by ECB President Jean-Claude Trichet yesterday in Madrid showed ``no strong inclination to boost rates.''
Gold for immediate delivery fell 57 cents to $612.68 an ounce at 12:23 p.m. in London. A close at that level would give bullion a weekly drop of about 4 percent.
The precious metal has declined 14 percent since trading at a 26-year high of $730.40 on May 12.
``Suddenly the market's appetite for risk has taken an about- turn,'' said Nick Moore, an analyst at ABN Amro Holding NV in London. ``Gold has been quite dramatically hit during the sell off. It is like a tide going out.''
Deficits
Still, Moore said gold may climb as U.S. trade and budget deficits weaken the dollar.
A widening U.S. deficit means more dollars need to be converted into foreign currency to pay for imports. It also indicates the dollar may need to weaken to make U.S. exports cheaper and imports more costly to close the gap.
A government report today is expected to show the U.S. trade deficit widened in April to $65 billion from $62 billion from March, according to a Bloomberg survey.
The U.S. current-account deficit, the broadest measure of trade, surpassed $800 billion in 2005 for the first time.
``Gold is a classic hedge,'' Moore said. ``Gold is being left like a jewel on the shore waiting to be picked up.''
Gold may reach $800 an ounce as the dollar weakens, he said.
The dollar traded at $1.2657 versus the euro. It's heading for the biggest weekly gain since November after Federal Reserve officials said inflation is a concern. Federal Reserve Chairman Ben S. Bernanke may reinforce the case for the bank to raise borrowing costs at a June 28-29 meeting.
Platinum rose $4.50 to $1,197.50 an ounce at 12:42 p.m. today, and silver gained 18 cents to $11.40 an ounce.
Thursday, June 08, 2006
Sell-off drives gold as low as $607.10/oz
SYDNEY, June 9 - Gold fell to its lowest price since mid-April as a big sell-off overnight accelerated on Friday in step with a stronger U.S. dollar.
Spot gold was quoted as low as $607.10 an ounce -- the lowest since April 17 -- versus $612.20 at the Sydney open. At 0223 GMT, gold cost $608.50/$609.50 an ounce.
Gold was quoted at $609.50 late in New York against $629.30 on Wednesday.
The losses meant gold had slid by about $123, or 17 percent, from its 26-year high of $730 hit on May 12.
A drop below $600 was seen as raising the prospect of a technical sell-off that could drive prices towards $540.
Investors tend to buy gold as a hedge against a weak dollar and inflation, and sell when the market moves in the opposite direction.
"The dollar is working against gold," a dealer said.
The dollar held near a one-month high against the euro on Friday after rallying on indications that the European Central Bank would be modest in raising interest rates following its latest rise.
Softer oil prices -- discounting inflation prospects -- also took some polish off gold's allure among investors.
U.S. crude futures held above $70 a barrel on Friday after touching a 2- week low on Thursday on hopes the death of al Qaeda's leader in Iraq may allow oil exports to improve.
Spot silver was up 3 cents from the late New York quote to $11.12/$11.21 an ounce.
Spot platinum was up $8 at $1,195/$1,202 an ounce. Spot palladium was down $3 at $310.00/$317.00 an ounce.
SYDNEY, June 9 - Gold fell to its lowest price since mid-April as a big sell-off overnight accelerated on Friday in step with a stronger U.S. dollar.
Spot gold
Gold was quoted at $609.50 late in New York against $629.30 on Wednesday.
The losses meant gold had slid by about $123, or 17 percent, from its 26-year high of $730 hit on May 12.
A drop below $600 was seen as raising the prospect of a technical sell-off that could drive prices towards $540.
Investors tend to buy gold as a hedge against a weak dollar and inflation, and sell when the market moves in the opposite direction.
"The dollar is working against gold," a dealer said.
The dollar held near a one-month high against the euro
Softer oil prices -- discounting inflation prospects -- also took some polish off gold's allure among investors.
U.S. crude futures held above $70 a barrel on Friday after touching a 2- week low on Thursday on hopes the death of al Qaeda's leader in Iraq may allow oil exports to improve.
Spot silver
Spot platinum
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