Money and Metals

Reuters reports on the metals markets. "Gold lacked impetus to move out of its current trading range and analysts said on Thursday that market participants would avoid taking risk ahead of year-end holidays. But focus remained on the currency and oil markets and any sharp move in the dollar and oil prices might stir the bullion market at a time when business was thin, they added."

"'There are clear signs that things are slowing down for Christmas, even though it's still a few days away. Gold remains tied to the dollar and the dollar has broadly stabilised compared with the big moves a couple of weeks ago,' Stephen Briggs, economist at SG Corporate and Investment Banking, said."

"Spot gold dipped to $627.70/629.20 an ounce by 1107 GMT from $628.00/629.50 late in New York on Wednesday, when it tested the key resistance of $630 for the third time this week, but failed to hold on gains."

"'You'd better go home and celebrate Christmas early. I don't see any support from oil and I guess we'll be trading in a range of $624 to $632 today,' a metals dealer in Hong Kong said."

"Gold may be prone to liquidation ahead of the year-end but the metal's long-term outlook remained bullish because of a fragile dollar, dealers said. The dollar steadied against the euro after rising in New York on solid U.S. retail sales, which eased some worries about the Federal Reserve possibly cutting interest rates in 2007."

"'We continue to expect little excitement from precious metals into the end of the year, although intraday volatility is likely to continue,' said John Reade, head of metals strategy at UBS Investment Bank. 'We do expect metal prices to trade higher in the new year and hold our one month forecast for gold at $660 and silver at $14 an ounce,' he wrote in a daily note."

"Spot silver edged up to $13.78/13.85 an ounce from $13.75/13.82 in New York. In other metals, platinum eased to $1,104/1,109 an ounce from $1,107/1,112 ate in New York and way below a record high of $1,395 in late November. Palladium was unchanged at $326/331 an ounce. 'Platinum and palladium are just dead,' Briggs said."

From MarketWatch. "It's 'no coincidence' that the earlier strength in gold prices 'coincided with a 1.9% cut in production (engineered to sustain prices) agreed upon by OPEC,' said Jon Nadler, analyst at Kitco.com."

"Gold prices found earlier support on concerns about rising energy prices Thursday. Crude futures rallied to a nearly one-week high after the Organization of the Petroleum Exporting Countries said it would cut production by 500,000 barrels per day, starting on Feb. 1, 2007 in an effort to balance supply and demand. But 'since the same strategy cannot be applied to the bullion market, gold's immediate price prospects continue to depend on the dollar,' said Nadler."

"'While the metal has found strong support at the $623 chart level, the lack of fresh dollar weakness is putting the breaks on the metals rally, suggesting further consolidation short-term around $625-$635,' said James Moore, an analyst at TheBullionDesk.com."

"Dennis Gartman, editor of The Gartman Letter, said thinning gold-market conditions as the year-end holiday season approaches have been creating volatility in gold prices. He pegged the next real support level for gold at $615 an ounce."

"'It is not at all unreasonable to expect that these latter levels of support shall be tested,' he said in his daily newsletter. 'At that point, our bullish interest shall likely be piqued once again; until then, we'll stand firmly upon the sidelines, watching. We're comfortable there for the moment at least.'"