Friday, January 12, 2007


Gold Holds Ground With Strong US$, Lower Oil

Bloomberg reports on the currency markets. "The dollar dropped from a seven-week high against the euro as traders said central banks were buying the 13-nation European currency. The U.S. currency initially gained after the government said U.S. retail sales rose in December by the most since July, cooling speculation the Federal Reserve will cut interest rates this quarter. Central banks then bought euros as it fell to its 100-day average versus the dollar, said some traders and analysts."

"'It's a technical move, liquidity is extremely bad,' said Rafael Martorell, chief dealer of spot foreign exchange at BNP Paribas in New York. 'When you have two or three names buying after big numbers everybody gets nervous. The dollar is to remain strong.'"

"The U.S. currency fell to $1.2916 per euro at 4:06 p.m. in New York from $1.2893 yesterday, after earlier touching $1.2868, the strongest since Nov. 22. The dollar slid to 120.35 yen from 120.49 yen, after yesterday exceeding 120 yen for the first time since December 2005. The euro's 100-day moving average is $1.2876 today, according to data compiled by Bloomberg."

"'There is no follow-through to buy the dollar,' said Steven Butler, director of foreign-exchange trading at Scotia Capital Inc. in Toronto. 'The euro has support at the 100-day moving average here,' adding that there is 'sovereign' buying of euros at about that level."

"The dollar still gained 1.4 percent this week versus the yen and 0.7 percent against the euro. 'The dollar has had an extensive gain this week,' said Jeff Gladstein, global head of foreign-exchange trading at AIG Financial Products in Wilton, Connecticut. 'The market is getting a bit exhausted.'"

The "Gold prices in New York rose Friday, with geopolitical tensions and short-covering providing the catalysts. February-dated bullion contracts rallied $13 to close at $626.90 an ounce on the Comex."

"'People didn't want to be short over the forthcoming long weekend,' says Jeff Christian, managing director at CPM Group. The Nymex floor session will be closed Monday in observance of the Martin Luther King holiday."

"Investors selling gold contracts or any other security short hope to buy them back at lower prices. When they close out their positions, a rally can ensue. 'Precious metals have been off, and those surveying the political situation don't see gold going much lower any time soon,' adds Christian."

"Chart watchers say the current action remains part of a broader sideways move. 'Gold is still in a long-term uptrend, but it's consolidating,' says Adolfo Rueda, a technical analyst Natexis Bleichroeder in New York. He sees support at $550 and resistance at $650."

From MarketWatch. "Gold futures climbed Friday to close at their loftiest level in seven sessions, ending the week more than 3% higher. 'What we are witnessing, with the strong advance today in gold, is similar to what we have seen each time the U.S. market is closing: two world views on gold,' said Ned Schmidt, editor of the Value View Gold Report. 'U.S. traders are in 'la-la land' and are bearish on gold and bullish on paper,' he said."

"By contrast, the 'rest of the world, which is bigger than U.S., is bullish on gold and bearish on the U.S. dollar,' he said, adding that 'the entire world knows that the dollar is going down in value, oil is long-term short [in] supply and that gold should rise in value.'"

"'Gold's resilience to hold above $600 in the face of a rising U.S. dollar and plummeting oil and copper prices is a testament to its internal strength and suggests much higher prices in the offing,' said Peter Grandich, editor of the Grandich Letter."

"Against this backdrop, March silver futures closed up 42 cents at $12.88 an ounce on Nymex and ended the week with a gain of 5.3%. April platinum added $7.30 to close at $1,152.10 an ounce, trading more than $40 above last Friday's close, while March palladium closed up $2.10 at $334.95 an ounce, a few cents lower for the week."

Interesting week!

'Chinese mainland stock markets tumbled Friday, marking their biggest decline in six months, as investors cashed in their profits from the market's recent record- setting rally and after the government said economic growth needed to slow further.'

'The Shanghai composite index dropped 102 points, or 3.7 percent, to finish at 2,668.11, the sharpest single-day drop since a 4.8 percent slump on July 13, 2006.'
No doubt! Gold refuses to drop below $600... so much for a new buying opportunity.
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