Tuesday, June 12, 2007


An Onslaught Of Bearishness For Gold

The Associated Press reports on currencies. "The euro drifted down to nearly two-month lows against the dollar on Tuesday as markets awaited U.S. economic data later this week. The 13-nation euro bought US$1.3321 in afternoon trading, down from US$1.3359 in New York late Monday."

"The dollar was bolstered late last week by news of rising bond yields, which lessened the likelihood of a Fed rate cut. Traders are scrutinizing economic data closely for pointers to the Fed's future course, and inflation figures due Thursday and Friday could help move the dollar."

"The British pound rose to US$1.9736 from US$1.9693, even as a government report showed that consumer price inflation eased to 2.5 percent in May, down from 2.8 percent the month before."

"The dollar was little changed against the Japanese currency, edging down to 121.67 yen from 121.77 yen."

From Bloomberg. "'Treasuries are helping the dollar,' said Brian Taylor, chief currency trader at Manufacturers & Traders Trust, which has $50 billion in assets. 'A couple of months ago there was a good chance that the Fed would lower rates, and now the worst could be behind us.'"

"The boost in yields also helped the dollar rise to the highest since February against the Swiss franc."

"The dollar broke the 100-day moving average of $1.3330 versus the euro, triggering sell orders put in place by traders expecting the European currency to fall further when it reached that price, Taylor said."

"The yield advantage of 10-year U.S. Treasury notes over similar-maturity German bunds widened 2.7 basis points to 61.62, the biggest gap since April 9. It was 46.59 at the end of May."

From MarketWatch. "Gold futures fell Tuesday, ending the session with a loss of almost $6 an ounce, with the market returning much of the prior session's gains as crude-oil prices declined and the U.S. dollar touched a two-month high against the euro."

"'An onslaught of bearishness, a small countertrend rally in the U.S. dollar and seasonal weakness, are all combining to pressure gold toward very key support in the $635-$640 area,' said Peter Grandich, editor of the Grandich Letter. 'It appears the smartest move at the moment is to sell a close below $635 or buy a close above $675,' he said."

"Gold for August delivery declined $5.90 to close at $653.10 an ounce on the New York Mercantile Exchange."

"'Gold continues to react to the dollar in the short term, but the support around the $650 level is formidable, particularly from the physical market,' said Julian Phillips, an analyst at GoldForecaster.com. 'It is now generally accepted in the gold market that around these levels lies the right buying opportunities.'"

"Still, 'it is becoming almost the technical picture against the fundamental picture, with traders and dealers reading the technicals down, against the strong tide of fundamentals absorbing their blows,' he said."

"For gold, 'buying from the physical sector is expected to keep the metal underpinned in the coming sessions,' said James Moore, metals analyst at TheBullionDesk.com. Additional support is pegged at $648/$644 and the 200-day moving average at $638.50, he said. 'Rallies back toward $660 are expected to meet further scaled up selling from funds/investor sources,' Moore said."

"Rounding out the metals action, July silver declined 18.5 cents to close at $13.09 an ounce, July platinum fell $1.60 to close at $1,296.40 an ounce and September palladium shed 15 cents to end at $372.85 an ounce."

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