Wednesday, June 20, 2007


"A New Correlation" For Gold, Yields

The Associated Press reports on currencies. "Soaring U.S. bond yields boosted the dollar against the yen and euro Wednesday as worries resurfaced about a Federal Reserve interest rate hike. The dollar approached a 4 1/2 year high against the Japanese yen, climbing to 123.67 Wednesday before easing back to 123.61 yen, according to Thomson Financial."

"The euro fell to $1.3400 in late New York trading from a high of $1.3436, reached earlier in the day after a new report showed an unexpected increase in producer prices in Germany."

"The dollar weakened against the British pound, which rose to $1.9929 from $1.9869 after minutes from the latest Bank of England meeting showed that its Monetary Policy Committee voted 5-4 to keep interest rates unchanged at 5.5 percent earlier this month."

"Concerns about a U.S. interest-rate hike were renewed Wednesday on surging U.S. bond yields. The 10-year Treasury note's yield climbed to 5.15 percent by late afternoon from 5.09 percent late Tuesday.

"In other trading, the dollar bought 1.0663 Canadian dollars, up from 1.0616, and 1.2375 Swiss francs, down slightly from 1.2404."

From MarketWatch. "Gold futures fell almost $5 an ounce Wednesday, closing lower for the first time in five sessions as rising bond yields, the stronger dollar and declining crude-oil prices combined to squeeze demand for the precious metal. Gold for August delivery shed $4.70, or 0.7%, to close at $660 an ounce on the New York Mercantile Exchange."

"The contract broke a winning streak that had spanned four sessions and added $12 to the benchmark price."

"'After four sustained days of winning sessions, gold prices were spooked once again by rising bond yields, and retreated to 'safer' ground near the $655.00 area,' said Jon Nadler, analyst at Kitco Bullion Dealers. 'A new correlation is emerging between gold and bond yields, although the dollar and its relative strength are still at the root of the equation,' Nadler said."

"'While yesterday's gains [in gold] were encouraging, further rallies are likely to rely on ongoing pressure on the dollar and strong energy prices,' said James Moore, analyst at 'For the moment resistance is expected toward the 100-day moving average at $665.45, although clearance should generate some additional momentum for gold to target $675,' he said."

"Crude-oil futures fell Wednesday, after the Energy Department reported big increases in crude-oil and gasoline stocks. Crude supplies jumped 6.9 million barrels for the week ended June 15, while motor gasoline supplies also rose 1.8 million barrels to 203.3 million."

"Among the metals, silver prices followed gold lower, with the July contract losing 7.5 cents to close at $13.25 an ounce. September palladium added $3.40 to close at $379.90 an ounce and July platinum gained $2.30 to end at $1,300.80 an ounce."

"'Supply concerns continued to underpin platinum as the outcome of wage negotiations between the South African unions and mine companies remain uncertain,' said Mark O'Byrne, a director at Gold & Silver Investments Ltd. 'Should negotiations fail and strike action commence there could be a sharp upward adjustment in platinum prices,' O'Byrne said."

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