Friday, October 06, 2006


'Follow-Through Needed' For Gold

Reuters reports on currencies. "The Canadian dollar inched lower against the U.S. currency on Friday, surrendering earlier gains as the market digested tepid domestic jobs figures, while the greenback rose after upward revisions to U.S. jobs data eased concerns over an economic slowdown."

"A tighter U.S. labor market would likely keep upward pressure on wages and inflation, reducing the chance that the U.S. Federal Reserve will cut interest rates."

"'Prior to the U.S. employment report, the Canadian dollar had been stronger, but then it was hit along with almost every other major currencies, which tumbled after the U.S. payroll results and the prospect of big upward revisions,' said Doug Porter, deputy chief economist at BMO Capital Markets in Toronto."

"The resource-linked Canadian dollar found some support in steady crude oil prices, Porter said. 'Whereas the other currencies weakened, the Canadian currency was almost unchanged during the session, with oil prices holding on around $60 a barrel.'"

From MarketWatch. "Gold futures staged a late-day reversal to close higher Friday, but strength in the U.S. dollar and weakness in oil prices helped prices tally a loss of more than $27 an ounce for the week."

"'Despite already being in a weakened position from heavy selling earlier in the week, gold managed to rally late in the day after being down $10 thanks to a stronger U.S. dollar and weaker energy prices,' said Peter Grandich. The 'reversal could be signaling the worst is over for gold, but follow-through buying next week back toward $600 will be needed to signal the all-clear sign,' he said."

"Gold for December delivery closed at $576.80 an ounce on the New York Mercantile Exchange, finishing the session with a gain of $1.30 after spending much of it on the decline. Prices fell to $564.50 during the day."

"'It's a good sign that gold has not been able to make a new weekly low below $563.50,' said Dale Doelling, chief market technician at Trends In Commodities.
'Weakness in the stock and bond markets may also be providing a firmer bid in the metals complex,' he said."

"'The return of weakness in the oil market is likely to weigh further on gold,' said James Moore, an analyst at in London. That will likely force prices to re-test of June's $542 low, he said in a note to clients."

"'However, as with any trend, a period of correction/consolidation is perfectly normal and is constructive longer-term, allowing investors to enter the market at more affordable levels,' he said."

"For now, traders 'remain apprehensive that despite relative strength indicators flashing near oversold levels, the precious metal appears determined to probe the ultimate (current) support near $542,' said Jon Nadler, an investment products analyst at bullion dealers"

"'Expect a few more attempts to regain composure but the $570 and $600 (200-day moving average) are now concrete ceilings to have to overcome,' he said.
And 'money might just be on the sidelines, awaiting to buy from $480 to $540,' he added."

"December silver futures moved higher Friday, reversing from a low of $10.87 to close at $11.175, up 10.5 cents. It finished 3.2% below last week's closing level.
Platinum and sister metal palladium closed lower, but well above the day's lows. January platinum declined $5.40 to end at $1,080.80 an ounce and December palladium lost 90 cents to close at $300.25 an ounce, with both contracts ending below last Friday's level."

Canadian Business. "Gold futures strengthened Friday in volatile trading, as worries about possible North Korean nuclear tests and short covering helped the market snap back from early weakness."

"Gold's recovery came about on concerns about North Korea possibly detonating a nuclear device as soon as this weekend, said Leonard Kaplan, president of Prospector Asset Management. He added that trading was thin, with big orders hitting the floor. 'That's why it moved quickly.'"

"In energy trading on the Nymex, crude oil futures fell after two days of gains amid doubts that the Organization of Petroleum Exporting Countries will cut production. A day after reports indicated that OPEC had agreed to cut production by 1 million barrels a day, the group's president said he was still consulting with fellow ministers on the need for an emergency meeting."

"'A meeting hasn't been called yet, we're still in consultations,' OPEC President Edmund Daukoru told Dow Jones Newswires."

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