Wednesday, March 28, 2007


Precious Metals Ride Oil Price Surge

Bloomberg reports on currencies. "The dollar may gain a second day against the euro after Federal Reserve Chairman Ben S. Bernanke said inflation remains the central bank's main concern. Traders bought the U.S. currency, paring the dollar's losses against the euro this month to 0.6 percent, after Bernanke told Congress the bank's policy is 'still oriented towards control of inflation.' The comment also helped the dollar trim losses versus the yen."

"'Bernanke is still vigilant on inflation, and this is giving the dollar a short-term boost,' said Scott Schultz, a currency trader at Brown Brothers Harriman & Co. in New York. 'Longer-term, the dollar is still under pressure.'"

"The dollar traded at $1.3317 per euro and 116.91 yen at 6:26 a.m. in Tokyo. Scott said the dollar will rebound to 117.20 yen and to $1.33 against the euro before 'the rally sputters.'"

"Volatility climbed on yen options as investors exited bets on riskier assets financed by borrowing in Japan's currency."

"The yen reached a nine-day high against the dollar as a slowing U.S. economy and tension between Iran and the U.K. led investors to pare back on so-called carry-trade bets. Japan's currency touched a three-month high in early March when investors trimmed carry-trade wagers amid a slide in global stocks."

"'The market is concerned about funding carry-trade positions with yen,' said Paul Mackel, a senior currency strategist at HSBC Holdings Plc in London. 'There is concern about the outlook for the U.S. economy; geopolitical risk is helping bring a bid to volatility.'"

"'The market is due for a re-pricing of risk, which for the foreign exchange market will result in a stronger yen and a stronger Swiss franc,' said Phyllis Papadavid, a currency strategist at Lehman Brothers Holdings Inc. in London. Lehman forecasts a yen rally to 112 per dollar at year-end."

From MarketWatch. "Gold futures closed higher Wednesday, as the stand-off between Iran and the U.K., surging oil prices and the falling dollar boosted demand for the precious metal. Gold for April delivery ended up $4.30 at $666.80 an ounce on the New York Mercantile Exchange."

"'The principal driver for the surge in bullion was once again rising crude,' said Jon Nadler, a metals analyst at 'The delayed reaction to Iran's initial abduction of the British sailors is now showing all of the signs of turning into a rush to safety of significant proportions.'"

"'The combination of heightened Middle East tension, the knock-on effect this is having on the oil market, and the continued poor performance by the dollar do still favor an upside breakout despite technical indicators suggesting otherwise,' said James Moore, metals analyst at Technical factors include options expiration and month/quarter-end positioning."

"Crude for May delivery was last up $1.27, or 2%, at $64.20 a barrel on the New York Mercantile Exchange, retreating a bit from a peak of $64.85 -- the highest intraday price seen for that contract in a regular trading session since Dec. 22."

"Other metals prices also posted gains. May silver ended up 17.5 cents at $13.455 an ounce, April platinum rose $8.80 at $1,250.80, and June palladium gained $1.85 at $357.85 an ounce."

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