Tuesday, January 09, 2007


Gold Up On "Bargain Hunting"

The Associated reports on the currency markets. "The dollar rose against the euro and yen Tuesday, as speculation about an interest rate cut in the U.S. dissipated. The euro dropped below $1.30 for the first time since late Nov. 24. In afternoon New York trading, the euro bought $1.2999, down from $1.3019 late Monday in New York."

"The decline came after Federal Reserve Bank Vice Chairman Donald Kohn said Monday that the U.S. economy was poised for moderate growth in 2007 along with lower inflation. But Kohn said there was no guarantee that core inflation would continue to ease, a comment analysts took to mean that the Fed was in no hurry to trim interest rates."

"In Europe, the European Central Bank is unlikely to lift its key rate of 3.5 percent when it meets Thursday. Most analysts predict such a move in February or March."

"The dollar bought 119.36 Japanese yen, up from 118.74 yen. The British pound rose to $1.9398 from $1.9378 on Monday, buoyed a reported gain in sales by retailers. The dollar bought 1.2419 Swiss francs, up from 1.2365 late Monday, and 1.1759 Canadian dollars, up from 1.1756."

"The markets are looking ahead to the Commerce Department's report on international trade on Wednesday and retail sales on Friday."

From MarketWatch. "Gold futures climbed almost $6 an ounce Tuesday, bouncing off earlier weakness suffered from a firmer dollar and a decline in crude-oil prices as traders pulled the precious metal's prices higher for a second session to take advantage of last week's 5% drop. Gold for February delivery closed up $5.60 at $615 an ounce, recovering from a low of $607.20."

"'The gold market took a hammering last week, primarily on U.S. fund selling, which appeared after the Asian and European hours of business on Friday,' said Julian Phillips, an analyst at GoldForecaster.com. 'But in Asian and European hours the gold price started to bob back like a cork released under water,' he said."

"'But a winter without cold and a dollar facing diversification and a massive persistent trade deficit point to a dollar trending lower, and OPEC holding prices up,' he said, referring to the group of some of the world's key oil producers, the Organization of the Petroleum Exporting Countries."

"'There is now little doubt that gold has hit a pretty bad pothole early out of the gate in 2007,' said Jon Nadler, an analyst at bullion dealers Kitco.com. 'We continue to lay the blame squarely at parts of the previously overheated commodity complex, in which piling on long positions with reckless abandon was the name of the game in 2006.'"

"Investors have been waiting for 'what they perceive to be bargain-basement levels in value' for gold before getting into the market to make fresh purchases, he said, noting that some thought 'such levels will not be achieved until gold dips to the $570-$580 area, in a repeat of last fall's slide.'"

"James Moore, analyst at TheBullionDesk.com, said 'bargain hunters and physical players will continue to underpin gold in the coming sessions, although given the current climate there remains the risk of further speculative-led liquidation.' Gold is finding some support from safe-haven demand triggered by U.S. air strikes in Somalia, said Moore."

"Other metals closed higher along with gold, with the exception of March palladium, which saw its contract lose 55 cents to close at $331.55 an ounce. March silver futures closed up 23.5 cents at $12.595 an ounce, and April platinum rose $6.80 to end at $1,133.70 an ounce."

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