Monday, July 24, 2006


Gold Fails To Follow Up On Gains

The US dollar made gains in trading today. "The U.S. currency increased its earlier gains against the Canadian dollar during New York trading Monday. The greenback fetched a 3-month high against the loonie amid the release of lower-than-anticipated Canadian retail sales data for the month of May. Shortly after touching its multi-month high against the Canadian dollar, the greenback reversed some of its gains."

"This came as investors found safety in the U.S. currency amid continued violence in the Middle East."

The Dow Jones Newswire. "Comex gold futures were knocked down to a three-week low on Monday at the New York Mercantile Exchange amid fund liquidation and a firmer U.S. dollar, however, they did recover some losses by the close."

"At settlement, the benchmark August contract was down $7.00 at $613.20 an ounce. The contract got as low as $602.50 during the session after data from the Commitments of Traders Report showed that speculators had built up their long positions during the prior week of trade. Speculators were 107,374 net long as of July 18 versus 101,929 net long the week prior, the CFTC reported late Friday."

"Dave Meger, director of metals trading at Alaron in Chicago, said Monday's fund liquidation was sparked by a rise in the dollar versus the euro. 'The gold market was prime for liquidation,' he said."

"Bernard Hunter, a director at Scotia Mocatta, said the first half of the trading day was a continuation of the fund liquidation seen in the marketplace over the past few sessions. But he added that people's expectations of rising conflict in the Middle East had softened, which led to profit-taking."

"However, late in the session, once the $600-an-ounce level was not breached some short covering appeared and took gold off of its lows. 'It was a good bounce off the lows of around $10-$12,' said Hunter, adding that Monday's close was not far off from Friday's levels although the downward momentum remains in place."

"In the silver market, futures managed to match the moves of gold but did settle higher on the day after dropping to a weekly low of $10.68 an ounce, basis the September contract. The contract later settled up 7.5 cents at $10.920. One trader noted that the turnaround in the copper market late in the day may have helped silver to push off its lows and move into positive territory."

"The platinum group metals complex settled mixed on the day. October platinum settled down $11.20 at $1,209.30 an ounce and September palladium ended $4.25 higher at $316.05 an ounce."

From Reuters. "'People are still nervous of it on the downside,' Simon Weeks, director of precious metals at ScotiaMocatta, said. 'If we can hang in here for a couple of days, I would expect some bargain hunting and small physical demand to come in. But at the moment it is relatively quiet,' he said."

"'The market could not break out on the upside level. I think that has sent bearish signals to the market,' said a dealer in Hong Kong, referring to the heavy selling after gold touched around $636 an ounce last Friday."

"Physical trading was slow in parts of Asia, with dealers expecting the gold price to head lower. But trading picked up in India, the world's largest gold consumer, ahead of the busy festival season that starts in a couple of weeks."

"If we can hang in here for a couple of days, I would expect some bargain hunting and small physical demand to come in."

That would be me.
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