Tuesday, May 01, 2007


Stronger Economy Lifts US$

The Associated Press reports on currencies. "The dollar recovered slightly against the euro on Tuesday after U.S manufacturing activity showed surprising strength in April that drove up prices for certain commodities. The euro dropped to $1.3620 from $1.3651 in New York late Monday, though remained within range of its all-time high of $1.3683, which it hit last week. The British pound edged up to $1.9996 from $1.9991."

"The manufacturing sector grew faster than expected and boosted prices for fuel, metals and corn-based products, according to the Institute for Supply Management. It was the highest reading in 11 months. The news supported the dollar, as it lessens the likelihood that the Federal Reserve will lower interest rates to encourage spending, especially as costs rise."

"The dollar climbed against the yen amid thin activity over Japan's Golden Week holidays, buying 119.72 yen compared to 119.56 yen late Monday. In other trading, the dollar rose against the Swiss franc, buying 1.2134 compared to 1.2077 late Monday."

From MarketWatch. "Gold futures closed Tuesday with a loss of more than $6 an ounce, with some strength in the U.S. dollar and weakness in oil prices easing investment demand for the precious metal."

"The market saw 'technical selling and some disappointment [that] gold could not test $700,' said Peter Grandich, editor of the Grandich Letter. 'Since the $665-$670 area was key resistance until recently, a retest of that area is healthy and likely the foundation gold needs to go through $700 later this spring.'"

"Gold for June delivery declined $6.20 to close at $677.30 an ounce. It hasn't closed at a level this low since April 9, but the day's low of $674.70 was the weakest intraday level since Thursday. The metals market saw thin trading Tuesday with markets in China and most of Europe closed for holidays."

"Looking ahead, 'the dollar is likely to be the key driver for gold in the coming sessions with a break through $1.37 against the euro potentially propelling gold back toward the $694 resistance line,' said James Moore, metals analyst at TheBullionDesk.com."

"'However, there is the risk that further failed rallies will trigger another correction, potentially leading to a test of chart support located around $664-$669,' Moore said."

"Crude-oil futures fell Tuesday, extending their prior-day decline ahead of the release of weekly data on supplies Wednesday that's expected to show a modest build in crude stocks. But news that Venezuela's government took over the country's last privately run oil fields provided some support."

"Back on the metals market, prices finished the session on a mixed note. June palladium added 15 cents to close at $374.15 an ounce while July platinum added $2.50 to close at $1,300.90 an ounce. July silver followed gold lower to finish at $13.37 an ounce, down 1.5%, or 20.5 cents."

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