Wednesday, July 18, 2007


Subprime Day For Gold

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 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."

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