Thursday, April 19, 2007


Gold Down On China Rate Talk

Daily FX reports on currencies. "Liquidation of EUR/JPY carry trades sent the Euro tumbling to 1.3565 against the US dollar. Despite this minor hiccup, Euro traders are still intent on taking the currency pair for a test of its December 2004 1.3667 all time highs as their determination was evidenced in the currency pair’s complete turnaround during the US trading session."

"For the first time in this latest wave of Euro strength, we heard comments from ECB officials about the level of the currency."

"After plunging back below the 2.000 mark momentarily, the GBP/USD stabilized throughout the US trading session. Now trading at 2.0018 at the New York close, the sterling bid tone may return with a vengeance as traders set their targets on tomorrow's retail sales report."

"The Japanese Yen was the story of the day as stronger economic data from Japan and China sent the currency tumbling against everything in sight. The early Asia trading session started with a sharp surprise in the tertiary activity index for the month of February."

"Originally expected to drop by 0.5 percent, activity actually accelerated by 1.0 percent. We expect this trend of upside surprises to continue as the recent weakness of the Japanese Yen boosts overall economic growth."

From MarketWatch. "Gold futures dropped $5 an ounce Thursday to close at their lowest level in a week, as news of faster-than-expected growth in China in the first quarter triggered worries that the government will have to take measures to slow down its economy, reducing demand for metals."

"Gold for June delivery finished down 0.7% at $688.30 an ounce on the New York Mercantile Exchange after a low of $682.50. These are the contract's weakest levels since April 12."

"The metals had 'a very negative session in Shanghai, where copper closed limit down," said Edward Meir, analyst at Man Financial. 'Negative sentiment in Shanghai was fueled by talk that the Chinese may once again raise interest rates in light of reports that China's economy grew at a faster-than-forecast 11.1% pace in the first quarter of this year,' Meir said."

"Metals traders have 'looked to the energy sector for direction today,' said James Moore, an analyst at rude-oil futures dropped to a level not seen since April 10 as traders worried about the potential for weaker Chinese energy demand."

"The correction in gold prices Thursday, however, 'comes as no great surprise considering the metal's lack of traction above $690,' said Moore."

"Silver prices also declined to a two-week low of $13.58 an ounce, with the May contract closing down 1.7%, or 24 cents, at $13.735."

"'Currencies and oil presented a somewhat nebulous picture and oil retreated under $63 per barrel,' said Jon Nadler, analyst at Kitco Bullion Dealers."

"'Then, there is the problem (if one can call it that) of China's amazingly hot rate of growth,' he said. It has prompted 'anxieties once again that the authorities will intervene in some manner to try to curb what could well become overheating.'"

"For now, other metals prices were sharply lower, with the exception of platinum, whose July contract continued higher, closing up $2.90 at $1,309.80 an ounce, extending Wednesday's 2% gain."

"'The metal is being pushed along by anticipatory fever for the platinum-oriented [exchanged-traded fund],' said Nadler. Sister metal palladium saw its June contract decline $2.80 to end at $380 an ounce."

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