Friday, May 25, 2007


Central Bank Sales "Weigh On Prices"

Reuters reports on the markets. "Gold ended higher in New York afternoon trade on Friday, bouncing back from the nine-week low set on Thursday, and analysts said the metal might recover on bargain hunting and physical buying. But larger-than-usual gold sales by European central banks in the past weeks might weigh on prices, they said."

"'At some stage, we would expect the downside to fade a little bit, giving some room for an upside swing. You start to feel now that there is some hesitation in the selling,' said Frederic Panizzutti, precious metals analyst at MKS Finance. 'We would expect gold to bounce back from around these levels. The dollar remains a key factor,' he said, adding physical buying was likely to be good."

"Gold was quoted at $655.35/655.85 an ounce by 3:02 p.m. EDT, against $653.20/653.70 in New York late on Thursday, when it fell as low as $651.30. Most-active gold for June delivery on the COMEX division of the New York Mercantile Exchange settled up $2.00 at $655.30 an ounce, trading between $653.30 and $656.90."

"'The fact that the speculative community is still holding relatively large long positions in gold adds an additional layer of downside risk if U.S. dollar strength continues,' Deutsche Bank said in a research note. 'We are maintaining our core bullish view on gold based on U.S. dollar strength fading and new record lows being hit during 2007.'"

"Traders said gold sales by European central banks under a five-year pact that started in late 2004 had dampened sentiment. On Tuesday, the European Central Bank said it sold 280 million euros of gold and gold receivables. Some analysts said the bank had accelerated sales recently to catch up with its slower sales pace early this year."

"In May, the Bank of Spain sold 1.3 million ounces of gold from its reserves, after it sold another 1.3 million ounces in March. In April, the Bank of France disclosed that it had sold 105 tonnes of gold in 2006."

"Silver rose 13 cents to $12.95/12.98 in New York compared with its last quote on Thursday in New York."

From MarketWatch. "Gold futures closed higher Friday as news reports that North Korea has test-fired several missiles boosted the metal's appeal as a safe-haven investment, but prices still closed out the week 1% lower after tumbling more than $9 an ounce in the previous session."

"'Once gold prices hit close to $650, that level is considered a bargain by many traders...especially if you see energy prices accelerating inflationary pressures,' said John Person, president of 'The housing numbers are strong, the U.S. and global economy is still strong, so gold is considered a value play here, especially since it has traded close to $650 this week,' he said."

"Among the other metals trading in New York, platinum and palladium prices moved lower Friday. 'There is some jawboning in the market now from investment houses sponsoring ETFs on European bourses that a U.S. ETF in platinum or palladium will never happen,' said Neal Ryan, direct of economic research at Blanchard. But even without the advent of a U.S. platinum-group metals exchange-traded fund, the European PGM ETFs are 'starting to show that while small and slow so far, there is some appetite for investing in the PGM ETFs in Europe.'"

"'If these platinum and palladium ETFs can end up impacting even 3% to 5% of the demand side of the market, they will significantly influence the price, he said."

"July platinum closed down $12.90 at $1,277.80 an ounce. It lost 3.6% from a week ago. June palladium fell $1.30 to close at $367.80 an ounce, which was up 0.7% from the week-ago close."

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