Money and Metals

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Reuters reports on currencies. "The dollar fell to a record low against the euro on Friday and was on track for its sixth straight weekly decline, weighed down by fears that losses in risky mortgage debt would hurt consumers and slow U.S. growth. The greenback also tumbled against the yen as investors unwound bets on risky assets such as stocks and emerging market debt."

"Defaults on subprime mortgages, made to borrowers with weak credit, and mounting losses on bonds backed by such debt have rattled financial markets and soured general dollar sentiment."

"St. Louis Federal Reserve Bank President William Poole emboldened dollar bears on Friday when he said losses in the non-prime mortgage market, which includes subprime, were large enough to affect home building and consumer spending."

"'It's just a story of general dollar weakness, and though nothing has really changed on housing, that's being used as a catalyst to sell,' said Dixon Fung, currency strategist at MG Financial in New York."

"Midafternoon, the dollar was trading at $1.3820, down 0.2 percent from late Thursday and near a record peak of $1.3844 hit earlier in the session."

"Sterling hit a 26-year high at $2.0587 before easing to $2.0552. The dollar index, which measures the greenback against a basket of major currencies hit a 12-year low."

"The dollar also fell to a six-week low at 120.87 yen before edging back to 121.05 yen, down 0.8 percent on the day."

"U.S. gold futures rallied to a two-month high in heavy trade Friday, capping a week of solid gains fueled by renewed fund buying and as investors sharply increased holdings of bullion held by gold exchange-traded funds (ETF)."

"Analysts said that gold was poised to retest the psychological $700 level in the near-term because of a combination of bullish factors including a weakening dollar, firm energy prices and improving jewelry demand."

"Most-active gold for August delivery on the COMEX division of the New York Mercantile Exchange was up $6.60, or 1 percent, at $684.70 an ounce, dealing between $675.80 and $687.60, which marked its loftiest level since May 10."

"Gold has attempted several times to break above the $700-level and retest the 26-year peak at $730 set in May 2006, but so far has failed this year."

"Joseph Guzzardi at Sabin Commodities said from the COMEX floor that the falling dollar and stronger energy prices had kept the precious metals market up most of this week. 'Some fund buying is coming back in here,' he said."

"COMEX estimated final volume at a busy 122,692 lots, and gold options at 13,447. Turnover at Chicago Board of Trade's electronic 100-oz gold futures was 27,329 lots at 2:21 p.m. EDT. Changes in gold and silver ETF holdings are closely watched by market participants because sharp inflows in gold ETFs could be a bullish signal as it shows longer-term retail investors are entering the market."

"At 2:37 p.m., spot gold was quoted at $682.90/683.70 an ounce, higher than $673.90/674.50 late Thursday. The London afternoon gold fix was $681.60."

"NYMEX October platinum closed up $8.10 at $1,346.60 an ounce. Spot platinum fetched $1,330/1,334 an ounce. September palladium inched up 80 cents to end at $374.75 an ounce. Spot palladium was quoted at $370/374 an ounce."

"COMEX September silver closed up 2.8 cents at $13.403 an ounce, trading between $13.300 and $13.500. Spot silver was quoted at $13.27/13.32 an ounce, compared with $13.24/28 late Thursday. London silver was fixed at $13.290."

"'I am cautious as recent gains have been made purely on a dollar weakness. The price movement is not artificial, but too much dependence on one factor is not healthy,' said Matthew Turner, precious metals analyst at Virtual Metals. 'Gold will be driven by the dollar, but if the currency doesn't move, then it might come back on profit taking.'"

"U.S. gold futures have rallied more than $35, or nearly 6 percent, since it closed at $650.60 on July 5."

Reuters reports on currencies. "The dollar eased against most major currencies and traded near record lows versus the euro on Thursday as concerns about the health of the U.S. housing market and its impact on consumer spending persisted. The dollar reached its lowest levels in years on Wednesday following congressional testimony by Federal Reserve Chairman Ben Bernanke."

"The Fed cut growth forecasts for the U.S. economy for this year and next and Bernanke said the hard-hit housing market will remain sluggish."

"'The market continues on a bearish mode towards the dollar, favoring higher-yielding currencies and Bernanke's testimony today didn't change that outlook,' said Nick Bennenbroek, head currency strategist at Wells Fargo."

"In early afternoon trading in New York, the euro was up 0.1 percent on the day at $1.3812, having hit $1.3834 on Wednesday according to electronic trading system EBS, its strongest level since its launch in 1999."

"The dollar was up 0.2 percent at 122.08 yen, but it briefly pared its gains versus the Japanese currency after a measure of business activity in the Mid-Atlantic region from the Philadelphia Federal Reserve Bank was surprisingly weak."

"'There's a great deal of volatility in this number. But to the extent that it came in weaker than expected is consistent with the lower dollar trend,' said Bob Lynch, head of G10 FX strategy at HSBC Bank USA."

"Sterling was down 0.2 percent at $2.0485 after softer-than-expected UK retail sales data, coming further off a 26-year peak of $2.0548 hit on Wednesday."

"The market currently reckons U.S. rates will have to stay on hold or be cut at some point but analysts expect the Bank of England and the European Central Bank to raise rates in September, which is supporting the pound and the euro."

"'The FX market has warmed to the idea that the Fed's going to be on hold for the rest of the year so it will have to look elsewhere for direction, probably other asset classes. The dollar's movements are very much dependent on how the U.S. corporate bond market trades, at least for the time being,' said Paul Mackel, senior currency strategist at HSBC in London."

"The dollar also was hurt Wednesday by news two Bear Stearns hedge funds exposed to the risky subprime mortgage sector were now virtually worthless. 'The hedge fund news hit the market and the dollar yesterday, but stocks rebounded and they are up again today, which may be tempering some of the dollar's losses,' said Bennebroek at Wells Fargo."

From MarketWatch. "Gold futures climbed more than $4 an ounce Thursday and copper prices rallied nearly 3%, sending the benchmark contracts for both metals to their highest closing levels in more than two months."

"Concerns over high energy prices and overall weakness in the U.S. dollar continued to support gold prices. Gold for August delivery closed $4.40 higher at $678.10 an ounce on the New York Mercantile Exchange, the contract's strongest closing level since May 15. It traded as high as $678.50, its highest intraday level since June 5."

"As for gold, it stayed mostly firm during the session and prices rose 'nicely' late in the session 'amid continued weakness in the U.S. dollar and near 11-month highs in the crude oil price,' Kitco Bullion Dealers analyst Jon Nadler said in a note to clients."

"'Barring any Friday surprises, bullion might close its third week of gains on a more confident note than it has enjoyed really, since late in May,' he said."

"'Gold remains firm and the dollar remains under pressure staying near record lows versus the euro and sterling with Fed Chairman, Ben Bernanke's Congressional testimony yesterday weighing on the currency,' said Mark O'Byrne, director at Gold & Silver Investments Ltd. Bernanke reiterated that 'upside risks to inflation remain the Fed's main concern, [though] markets were more interested in his references to other problems,' said O'Byrne in a research note."

"Meanwhile, crude futures prices closed near $76 a barrel, feeding worries over high energy prices."

"Also on Nymex, September silver gained 8.5 cents to close at $13.375 an ounce, October platinum added $1.30 to end at $1,338.50 an ounce, and September palladium rose $2 to close at $373.95 an ounce."

Bloomberg reports on the markets. "Gold in New York rose to the highest in six weeks after a decline in the value of the dollar boosted the appeal of the precious metals as alternative investments. Gold generally moves in tandem with the euro, which gained after the Federal Reserve tempered its forecasts for U.S. economic growth. Gold is up 5.6 percent this year while the euro has climbed 4.6 percent against the dollar."

"'The dollar is still weak, and that helps gold,' said Walter Otstott, senior broker at Dallas Commodity Co."

"Gold futures for August delivery rose $7.80, or 1.2 percent, to $673.70 an ounce on the Comex division of the New York Mercantile Exchange, the highest closing price for a most-active contract since June 6."

"Silver futures for September delivery rose 27.2 cents, or 2.1 percent, to $13.29 an ounce, the biggest gain in two weeks. The metal is up 2.7 percent this year."

"Five of the past six bear markets for the dollar have resulted in a higher gold price. The euro has had five straight weekly gains against the dollar and reached $1.3833 today, the highest since debuting in 1999, partly on speculation that interest rates in Europe will rise faster than in the U.S."

"Investor concerns that defaults on U.S. subprime mortgages will widen may spur demand for gold as a haven, analysts said. Bear Stearns Cos. told investors in its two failed hedge funds that they probably won't get any money back after 'unprecedented declines' in the value of AAA rated securities used to bet on subprime mortgages."

"'This is subprime day,' said William O'Neill, partner at research firm Logic Advisors. 'We're seeing some alternative asset buying in gold.'"

From AFX News. "Gold's rise rested on four pillars of support, according to HSBC precious metals analyst Jim Steel: inflation concerns; the dollar's fall against the euro; lower bond yields and higher oil prices."

"'Gold hasn't just risen because of the dollar, it's risen against sterling as well,' said BullionVault.com analyst Adrian Ash. 'A lot of people are concerned about Bear Stearns, and the level of fear you're seeing in the market is bringing people back to gold.'"

"Among other precious metals, platinum is up to 1,318 usd against 1,308 usd after reports that South African mine workers rejected a pay offer from Northam Platinum, increasing the likelihood of strike action. Its sister metal palladium fell to $365 against $366."

Reuters reports on currencies. "The dollar edged up against the yen on Tuesday after a government report showed foreign investors bought a record amount of U.S. securities in May. A slightly larger-than-expected advance in producer prices last month also provided mild support for the greenback, which helped to ease some concerns that the Federal Reserve will soon have to cut interest rates."

"However, the dollar failed to get much traction against the euro or sterling. The latter pushed further above $2.04, a 26-year high, after UK inflation data reinforced expectations of another rate hike from the Bank of England."

"Midafternoon, the dollar was up 0.4 percent at 122.33 yen, while the euro was up 0.1 percent at $1.3780, not far from a lifetime high of $1.3813 hit last week."

From MarketWatch. "Gold futures closed slightly lower Tuesday to tally a three-session loss of more than $2 an ounce as the U.S. dollar traded on a mixed note and crude price backed off a high of more than $75 a barrel."

"'Minor price fatigue was visible in the market as bullion prices turned under the critical $665 mark on Tuesday,' said Jon Nadler, analyst at Kitco Bullion Dealers."

"Gold for August delivery fell 40 cents to close at $665.90 an ounce on the New York Mercantile Exchange. The contract fell $1 Monday, pulling back after reaching a high of $669.50 during the regular session. It's lost $2.40 since Thursday's close of $668.30."

"'Despite an onslaught of increased bearishness and some highly suspect capping trading patterns on the Comex, gold has managed to more than hold its own during its weakest seasonally favorable period,' said Peter Grandich, editor of the Grandich Letter. 'The big surprise in coming days could be a major break above key resistance in the $670 to $675 area,' Grandich said.'

"On the currency markets, the British pound rallied to a new 26-year peak against the dollar. The greenback edged higher against the yen, but remained lower against major European currencies."

"'The divergence between gold and the valuation of the dollar is reaching an extreme level that cannot be sustained,' said Ned Schmidt, editor of the Value View Gold Report. 'What that means is that the value of major currencies has appreciated, sending the dollar to a new low.'"

"But 'gold, which is really just a money, has not reflected that valuation,' he said in e-mailed comments. He said a 'major upward revaluation of gold is extremely likely.'"

"Aside from the dollar, 'the near-record oil prices and the increasing inflationary pressures which they are creating internationally,' are just as important Mark O'Byrne, director at Gold & Silver Investments Ltd. said."

"Elsewhere in metals trading Tuesday, metals prices closed broadly lower, with September silver losing 4.7 cents to close at $13.018 an ounce. September palladium fell $2.45 to finish at $367.75 an ounce and October platinum fell $4.50 to close at $1,322.60 an ounce."

AFX International reports on currencies. "The euro dropped back slightly against the dollar after France's president Nicolas Sarkozy once again put the level of the single currency on the euro zone's economic policy agenda. Speaking following the Franco-German summit meeting in Toulouse, Sarkozy noted that Article 111 of the EU treaty stipulates that 'the council can define the general direction of currency policy.'"

"Sarkozy went on to suggest the problem is not the level of the euro but the level of the other currencies. 'Sustained strength in the euro exchange rate threatens to bring the crisis in the affairs of the euro zone to a head,' said Stephen Lewis, analyst at Insinger de Beaufort."

"Meanwhile in the UK, the pound shrugged off government figures showing house prices rose at a slower pace in May and marched up to a 26-year high of 2.0402 ussd."

From Reuters. "The Canadian dollar stormed to 96 U.S. cents for the first time in 30 years on Monday as higher oil prices triggered a slew of automatic buy orders. The Canadian dollar closed at C$1.0428 to the U.S. dollar, or 95.89 U.S. cents, up from C$1.0485 to the U.S. dollar, or 95.37 U.S. cents, at Friday's session close."

"'It's been one-way traffic,' said Steve Butler, director of foreign exchange trading at Scotia Capital. 'I think it's going to be a little bit sticky here, but certainly I think (the Canadian dollar's) got some more room to appreciate.'"

From Dow Jones. "Gold and silver futures pulled back slightly Monday in markets that weresubdued ahead of a pair of key inflation reports and congressional testimonyfrom the Federal Reserve chairman this week."

"August gold fell $1 to $666.30 an ounce on the Comex division of the New YorkMercantile Exchange. As pit trade was closing, the August contract at theChicago Board of Trade was down 80 cents to $666.50."

"Comex September silver fell 4.5 cents to $13.065. As it was closing, CBOTSeptember silver was up 5 cents to $13.063."

"'We have severe resistance for gold at the $670 to $675 area,' said Leonard Kaplan, president of Prospector Asset Management. 'The euro did nothing, and gold did nothing.' He put resistance for September silver around $13.25."

"Jon Nadler, analyst with Kitco Bullion Dealers, commented that some profit-taking may have been prompted in the bullion markets since the dollar'srecent decline appears to be decelerating and crude oil's upward momentumappears to be tapering off. Shortly after gold closed, the euro was at $1.3784,little changed from $1.3783 late Friday although also not far from its recordhigh of $1.3812 on Friday."

"Gold has been benefiting from the dollar's weakness lately, but Nadler said this has also been one of his concerns. 'When this fuel of dollar declines runs out, what are we left with?' he asked rhetorically."

"The market is awaiting a heavy slate of economic data the next three days,plus Tuesday and Wednesday will feature congressional testimony from Federal Reserve Chairman Ben Bernanke."

"'I think that is what the market is going to key on,' said said Larry Young, senior trader with Infinity Brokerage Services. 'Nobody wants to do anything until they hear the numbers during the week andespecially Bernanke's speeches on Wednesday and Thursday,' echoed Kaplan."

From Bloomberg. "Platinum rose in London after Lonmin Plc, the world's third-biggest platinum company, said it would delay sales of some of its metal at a time when global supply was barely keeping pace with demand."

"The sales were expected to help platinum supplies exceed demand in the second half of 2007 from a deficit in the first half, London-based platinum marketer Johnson Matthey Plc said in May. 'The Lonmin shortfall will likely make a dent in any expected surplus,' Jeremy Coombes, general manager of marketing at Johnson Matthey in Royston, England, said today. 'It supports the platinum price.'"

"Platinum for immediate delivery rose $3.50, or 0.3 percent, to $1,315 an ounce as of 1:02 p.m. London time, bringing the gain this year to 16 percent. Coombes declined to say what Johnson Matthey's forecast is for supply and demand this year."

"Supply exceeded demand last year by 10,000 ounces, the first surplus since 1998, according to Johnson Matthey. Palladium rose 25 cents to $368.50 an ounce."

MarketWatch reports on currencies. "The dollar touched a fresh record low against the euro and dropped against other major currencies Friday, after a government report showed retail sales fell much more than forecast last month, heightening concerns over the state of the U.S. economy. The dollar finished the week down over 1% against the euro and the yen on rising speculation the Federal Reserve will cut interest rates."

"The U.S. currency has come under heavy selling pressure since Tuesday after Wall Street's two largest rating agencies signaled that problems in the subprime mortgage market aren't going away and will probably get worse."

"'The 0.9% fall in June retail sales is significantly worse than expected and has sparked new U.S. dollar sales,' said Marc Chandler, global head of currency strategy at Brown Brothers Harriman."

"Late in New York, the euro stood at $1.3788, compared with $1.3781 late Thursday, after touching an intra-session high of $1.3813. The dollar was quoted at 122.03 yen, compared with 122.47 yen."

"The British pound was quoted at $2.0332, compared with $2.0295. It had earlier risen to $2.0365, matching a 26-year high it reached in the previous session. The dollar changed hands at 1.2027 Swiss francs, compared with 1.2038 francs."

"The Dollar Index, which tracks the greenback against a basket of the world's major currencies, hit its lowest level in two-and-a-half years at 80.44."

"With weak demand for durable goods and falling gas prices, U.S. retail sales fell 0.9% in June, the largest decline since August 2005, the Commerce Department said Friday. Revisions to May and April data were also negative on balance.

"The dollar pared some of its losses after a monthly survey released Friday by Reuters and the University of Michigan showed consumer sentiment rebounded in July."

"For the week, the dollar weakened 1.2% against the euro and 1.1% against the yen.
Many currency analysts are looking for a near-term test on the $1.40 level for the euro."

"'The US dollar itself is the single biggest exception to the general resiliency that the global economy is demonstrating, which tends to be under-appreciated by most observers,' Chandler said. 'The most compelling diagnosis of the dollar attributes its ailment to the fact that most market participants, including a strong majority of primary dealers, cannot see the Federal Reserve raising interest rates.'"

"'Until the market is convinced that growth will be sustained in [the second half of the year], the dollar may not find a solid floor,' he said."

"But in the very short-term, Brian Dolan, chief currency strategist at Forex.com, a division of Gain Capital, said the dollar's decline has now reached significant technical support levels. 'I'm looking for the down move to transition into a consolidation at the minimum, with decent potential for a corrective rebound in the dollar,' he said."

From Reuters. "U.S. gold futures retreated by midmorning Friday on profit-taking, but a weakening dollar and firmer oil prices limited losses and traders said the yellow metal should rise further in the near term."

"'Gold will continue to firm up as long as the dollar is weakening the
way it has been,' Carlos Perez-Santalla of Hudson River Futures said from
the COMEX floor."

"At 10:57 a.m. EDT, most-active gold for August delivery on the COMEX division of the New York Mercantile Exchange was down $2.40 at $665.90 an ounce, trading between $664.40 and $669.90."

"Investors opted to lock in profits after this week's rally. August gold on Thursday surged to a peak of $671 which marked the loftiest level since June 7. Gold futures have rallied more than $20 or 3 percent from last Thursday's close of $650.60."

"The US dollar is still on pace for its second-biggest weekly drop of the
year against a basket of major currencies, the dollar index, which
is down more than 1 pct on the week."

"'I think we are going to see $678 next week..because of the weak dollar,' Perez-Santalla said."

"'The combination of weak dollar and oil driven inflationary concerns will continue to work in gold's favor,' said James Moore, an analyst at TheBullionDesk.com. Moore said that spot gold's next resistance level was seen at $675 and the precious metal could challenge $690."

"Spot gold was quoted at $664.30/664.90 an ounce, lower than $667.00/667.80 late Thursday. The London afternoon gold fix was $666.50. COMEX September silver was down 6 cents at $13.120 an ounce, trading between $13.075 and $13.235."

"Spot silver was quoted at $13.02/13.06 an ounce, compared with $13.08/13.13 late Thursday. London silver was fixed at $13.125. NYMEX October platinum fell $5.80 to $1,324.90 an ounce. Spot platinum fetched $1,312/1,316 an ounce."

"September palladium was also down $2.25 at $370.50 an ounce. Spot palladium was quoted at $366/370 an ounce."