Monday, July 10, 2006

 

Gold Looks For Support, Oil Prices Fall

Reuters South Africa has the days trading numbers. "Gold pared losses in afternoon trade on Monday after falling 1.6 percent on profit-taking, with investors keeping an eye on currency and oil markets for leads. A marginal drop in oil prices and a recovery in the dollar against the euro kept the market under pressure, dealers said."

"'It will stabilise at around $620 an ounce, but we are going to need some bullish news to galvanise the market higher,' said James Steel, analyst at HSBC Bank, adding prices were unlikely to collapse given long-term dollar weakness."

"Spot gold hit a high of $632 an ounce before falling as low as $620.00. It was quoted at $625.40/626.90 by 1446 GMT, compared with $629.80/631.30 in New York late on Friday. Platinum dropped to $1,219/1,225 an ounce from $1,228/1,233 in New York. Palladium fell to $314/320 an ounce from $321/326. Silver was down at $11.14/11.24 an ounce from $11.29/11.39."

"'We do not expect any further gains until the Fed has clearly finished, or at least paused, from its rate hiking,' said John Reade, precious metals analyst at UBS Investment bank. UBS lifted its short-term forecast for gold prices to $600 in one month from now and $650 in three months, from $550 and $580 respectively. It saw silver at $10.80 and $12.50 after one month and three months and platinum prices at $1,200 and $1,300."

"'Gold looks under pressure,' Stephen Briggs, economist at SG Corporate and Investment Banking, said. 'The broad longer-term direction is upwards because commodities are still very fashionable, but it needs to take a bit of pause at the moment.'"

"'The big picture continues to depend on the geopolitical situation, the moves of the dollar and the oil price,' said Wolfgang Wrzesniok-Rossbach, head of precious metals marketing at Germany's Heraeus. Oil prices edged below $74 a barrel, extending the previous session's 1.4 percent fall on expectations of progress in talks on Iran's nuclear programme."

Comments:
It is at times like this that technical analysis can help. EWI is having a 'free week' starting July 19th, and I'll try to post some of what I see here.
 
What is EWI? Thanks.
 
Elliott Wave International
 
Don't know about EW's (or KW's) short-term predictive value. However, I totally buy the overall wave concepts as economic reflections of mass human psychology. Human nature just doesn't change, which is why "history rhymes".

IMHO, the recent DJIA high was probably the end of wave 2 (cyclical bull) within the secular bull. Wave 3's going to be a long ways down...
 
Steve Roach published a letter today teaching Ben Bernanke how to do this job. This is too humiliating for BB, but he probably really needs some lecturing on being consistent. He is just too much of a wobbler, making the jittery markets really on edge.
 
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