Tuesday, January 23, 2007


Gold Climbs On Fund Buying

The Associated Press reports on currencies. "The euro rose and the British pound climbed to its highest level against the U.S. dollar in more than 14 years on Tuesday following positive economic data from Europe. The 13-nation euro rose as high as US$1.3044 in afternoon European trading, up from US$1.2954 in New York late Monday. It settled back later to US$1.3023."

"The pound rose as high as US$1.9917 from its level Monday of US$1.9764 — reaching its highest level since the week before the so-called 'Black Wednesday' in September 1992, when Britain crashed out of the European Exchange Rate Mechanism."

"The euro rose, pulling the pound with it, after new data showed that euro-zone factory orders rose by 1.4 percent on the month in November, beating economists' expectations of a 1 percent increase. The pound, which appeared headed for the US$2 mark near the end of last year but then retreated, has been helped recently by a surprise Bank of England interest rate increase this month."

"'Given the surprise rate hike, it is hard to imagine anything other than a hawkish stance from policymakers,' analysts at Credit Suisse First Boston said in a note to clients. 'Recent data seem to support this, making sterling continue to look tactically solid, despite the fact that it is already in rich territory.'"

"The euro has been supported by perceptions that the European Central Bank will continue raising interest rates while the U.S. Federal Reserve keeps its rates on hold — as it has over recent months — or even cuts them."

"The dollar also fell against the Japanese currency on Tuesday, slipping to 121.42 yen from 121.61 yen."

The Daily FX. "After consolidating for close to two weeks, the Euro finally broke out to the upside against the US dollar. ECB talk is spurring the currency’s extension as it confirms the central bank’s plans to raise interest rates plans again in March."

"In probably the most direct comment that we have heard from the ECB thus far, monetary policy committee member Bini-Smaghi said today that not raising interest rates would mean 'feeding excess liquidity growth,' which the ECB does not want."

From Reuters. "Gold jumped more than 2 percent to a seven-week high on Tuesday as a sharp decline in the dollar and firmer oil prices triggered speculative fund buying, dealers said. Gold was quoted at $647.10/648.10 by 3:11 p.m. EST, up from $632.60/633.60 in New York late on Monday."

"Other precious metals tracked gold higher, with spot palladium hitting a 4-1/2-month peak, platinum rising to a seven-week high and silver reaching its highest level in more than a month."

"Most-active gold for February delivery on the COMEX metals trading division of the New York Mercantile Exchange settled up $11.80, or 1.9 percent, at $645.90 an ounce. It was trading in a $15-range between $632.30 and $647.00 an ounce -- its highest level since Jan. 3.

"'The buying we have seen this morning has been predominantly funds. The gold market is going to encounter quite a bit of chart resistance, but if we break above $648 an ounce, the market will go to $676,' said Peter Hillyard, head of metals sales at ANZ Investment Bank."

"'We've got a lot of buy-stops going off. It looks to me like we're back to where we were. The funds were looking at the old fundamentals,' said George Gero, vice president at RBC Capital Markets Global Futures."

"Gero said there were a host of positive factors supporting gold, including geopolitical concerns related to President George W. Bush's upcoming State of the Union speech, good physical demand in the Far East, future ETFs in India, a weak stock market, the low dollar and higher crude."

"'And then of course, the saber-rattling that's coming from a new area, where the Bolivian president is talking about nationalizing the mining business,' Gero added."

"In other precious metals, palladium touched $348 an ounce, the highest since early September. It was last quoted at $347/352, compared with $341/346 in New York late Monday. Silver was last quoted at $13.23/13.30, versus $13.01/13.08 at its previous close."

"Platinum hit $1,173 an ounce, the highest since Dec. 4, before slipping to $1,170/1,175, against $1,156/1,162 in New York."

"Crude oil surged more than $2 a barrel and triggered a rally among energy producers. Investors regained their optimism about corporate profits after a series of positive earnings reports."

"Energy prices spiked after the Energy Secretary Samuel Bodman said the U.S. will double the size of the nation's Strategic Petroleum Reserve. Prices were already rising as a cold snap in the northeast United States was seen increasing demand for heating fuel in the region."

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