SAN FRANCISCO (MarketWatch) -- Gold futures closed $4 an ounce higher Monday, ending a three-session losing streak that has subtracted nearly $25 an ounce from the benchmark contract as traders remained wary over a jittery U.S. stock market, renewed weakness in the dollar and volatility in oil prices.
"I expect to see fairly listless range-bound trading this week," said Zachary Oxman, a senior trader at Wisdom Financial. But most likely, trading may be more prone to a "downside slant because of the continued risk of fallout from the sub-prime market and possible activity from central banks selling gold," he said in emailed comments.
Even so, "we're not looking too overbought at these levels and barring short-term pressure from prevailing stock market issues, I expect a run to $700-plus by year's end," he said.
Gold for August delivery added $4 to close at $664.10 an ounce in morning trading on the New York Mercantile Exchange. The contract, including the nearly $25 lost in the past three sessions, retreated by 3.6% for all of last week.
"Gold is back in an area of previously strong support, and given the still-bearish outlook for the dollar and the concerns toward U.S. subprime and credit risk, we still view dips as buying opportunities," said James Moore, analyst at TheBullionDesk.com, in a note to clients.
On the currency markets, the dollar was up against Japan's yen but fell against the euro. And crude prices for September delivery closed modestly lower Monday, after trading between a high of $77.26 and a low of $76.10 a barrel.
Meanwhile, U.S. stocks climbed Monday as investors brushed aside worries about tightening credit that sparked last week's brutal sell-off to focus on corporate profits
Monday, July 30, 2007
Gold Rises as Dollar Declines Against Euro; Silver Climbs
July 30 (Bloomberg) -- Gold rose in New York as the dollar's decline against the euro boosted the appeal of the precious metal as an alternative investment. Silver also gained.
Gold generally moves in the opposite direction of the U.S. dollar, which fell the most against the euro in two weeks. Gold has gained 6.1 percent this year, while the euro climbed 3.7 percent against the dollar.
``The euro is up today, so we'll start to see some new buying coming in for gold,'' said Nick Ruggiero, a trader at Eagle Futures Inc. in New York.
Gold futures for December delivery rose $4.30, or 0.6 percent, to $676.60 an ounce on the Comex division of the New York Mercantile Exchange.
Silver futures for September delivery rose 18.8 cents, or 1.5 percent, to $12.903 an ounce. The metal is still down 0.3 percent this year.
The dollar fell as much as 0.4 percent against the euro today on speculation losses on securities backed by subprime mortgages will weaken U.S. growth.
Last week, the euro fell 1.4 percent against the dollar, the first weekly loss in seven. The August contract for gold, the most-actively traded before today, fell 3.6 percent last week after three consecutive weekly gains. The euro reached a record $1.3852 on July 24.
Gold will struggle to rally until the dollar weakens further or an aversion to risky assets triggers buying, said John Reade, an analyst at UBS AG in London.
``At the moment, investors are not yet worried enough about systemic financial risk to think about owning gold,'' Reade said.
Stocks worldwide rebounded today from a $2.1 trillion sell- off last week. The Dow Jones Industrial Average last week fell 4.2 percent and the Standard & Poor's 500 Index lost 4.9 percent.
Gold generally moves in the opposite direction of the U.S. dollar, which fell the most against the euro in two weeks. Gold has gained 6.1 percent this year, while the euro climbed 3.7 percent against the dollar.
``The euro is up today, so we'll start to see some new buying coming in for gold,'' said Nick Ruggiero, a trader at Eagle Futures Inc. in New York.
Gold futures for December delivery rose $4.30, or 0.6 percent, to $676.60 an ounce on the Comex division of the New York Mercantile Exchange.
Silver futures for September delivery rose 18.8 cents, or 1.5 percent, to $12.903 an ounce. The metal is still down 0.3 percent this year.
The dollar fell as much as 0.4 percent against the euro today on speculation losses on securities backed by subprime mortgages will weaken U.S. growth.
Last week, the euro fell 1.4 percent against the dollar, the first weekly loss in seven. The August contract for gold, the most-actively traded before today, fell 3.6 percent last week after three consecutive weekly gains. The euro reached a record $1.3852 on July 24.
Gold will struggle to rally until the dollar weakens further or an aversion to risky assets triggers buying, said John Reade, an analyst at UBS AG in London.
``At the moment, investors are not yet worried enough about systemic financial risk to think about owning gold,'' Reade said.
Stocks worldwide rebounded today from a $2.1 trillion sell- off last week. The Dow Jones Industrial Average last week fell 4.2 percent and the Standard & Poor's 500 Index lost 4.9 percent.
Gold steadies above 2-week low, remains defensive
LONDON (Reuters) - Gold steadied on Monday above a two-week low, but investors were nervous about taking new positions following recent losses in bullion and global equities markets.
Traders said weaker share prices had forced investors to lighten positions in risky assets, including commodities, until the situation in stock markets stabilized.
"The weakness in global stock markets on concerns of a credit crunch continues and this is probably a negative factor for gold," Dresdner Kleinwort said in a research note.
"Rising crude oil prices failed to provide support for gold last Friday, and might again be overruled by investors shunning risky assets and flying to the safe havens of government bonds."
Spot gold was quoted at $662.00/662.00 an ounce by 0949 GMT, against $661.40/662.20 in New York on Friday, after it fell as far as $656.90 -- the lowest since July 9.
Traditionally gold is seen as protection against economic and political uncertainty, but in recent months stock market losses have triggered a sell-off in precious metals.
"There are two types of investors in the gold market: there are investors who buy gold as a safe-haven asset and stick with it for years, and there are the second type of investors who react on news flows and macro-economic data," said Michael Widmer, analyst at Calyon Corporate and Investment Bank.
"I don't think they buy gold as a safe-haven asset. They move in and out of the gold market as their view on the fundamentals drivers changes," Widmer said, adding he was still not bullish on gold and any substantial price rise might not come through until the fourth quarter.
Dealers kept an eye on the dollar, which slipped modestly against a basket of major currencies, giving back some of last week's gains as investors geared up for a barrage of economic data and potentially more credit-driven market volatility.
Traders said weaker share prices had forced investors to lighten positions in risky assets, including commodities, until the situation in stock markets stabilized.
"The weakness in global stock markets on concerns of a credit crunch continues and this is probably a negative factor for gold," Dresdner Kleinwort said in a research note.
"Rising crude oil prices failed to provide support for gold last Friday, and might again be overruled by investors shunning risky assets and flying to the safe havens of government bonds."
Spot gold was quoted at $662.00/662.00 an ounce by 0949 GMT, against $661.40/662.20 in New York on Friday, after it fell as far as $656.90 -- the lowest since July 9.
Traditionally gold is seen as protection against economic and political uncertainty, but in recent months stock market losses have triggered a sell-off in precious metals.
"There are two types of investors in the gold market: there are investors who buy gold as a safe-haven asset and stick with it for years, and there are the second type of investors who react on news flows and macro-economic data," said Michael Widmer, analyst at Calyon Corporate and Investment Bank.
"I don't think they buy gold as a safe-haven asset. They move in and out of the gold market as their view on the fundamentals drivers changes," Widmer said, adding he was still not bullish on gold and any substantial price rise might not come through until the fourth quarter.
Dealers kept an eye on the dollar, which slipped modestly against a basket of major currencies, giving back some of last week's gains as investors geared up for a barrage of economic data and potentially more credit-driven market volatility.
Launch of Dubai's gold ETF as early as 2008
DUBAI (Reuters) - Dubai, already the region's gold trade hub, may see the launch of the Middle East's first gold exchange traded fund (ETF) in 2008, a senior World Gold Council (WGC) official said on Monday.
"Gold trade in Dubai and the region is definitely booming and the market players need an ETF market to manage their risk and catch up with other international markets," said Moaz Barakat, managing director of the WGC in the Middle East, Turkey and Pakistan.
"There is a great interest for ETFs in the region... We may have a Dubai ETF next year."
ETFs offer investors exposure in the underlying commodity without taking physical delivery. Sponsors of gold ETFs buy a matching amount of the commodity from the market to keep in vaults.
"It will be linked to a dollar-based gold price, but it has not been decided yet if it will be listed on the Dubai Gold and Commodities Exchange or the Dubai International Finance Exchange," he said.
The Dubai ETFs will comply with Islamic law or sharia which bans the charging of interest, equating it with usury, and prohibits investment in businesses that trade in alcohol or gambling, he added.
Dubai is a long-established market for gold bullion and jewellery, wholesale and retail, fuelled by strong demand from the Arab world and India, the world's main gold market.
The Gulf commercial hub launched the region's first gold futures exchange in 2005 as the economies of Gulf Arab nations boomed on a windfall oil income.
U.S.-based StreetTRACKS gold shares (GLD.N: Quote, Profile, Research) is the world's largest gold ETF accounting for more than 80 percent of the metal held by all such funds.
"Gold trade in Dubai and the region is definitely booming and the market players need an ETF market to manage their risk and catch up with other international markets," said Moaz Barakat, managing director of the WGC in the Middle East, Turkey and Pakistan.
"There is a great interest for ETFs in the region... We may have a Dubai ETF next year."
ETFs offer investors exposure in the underlying commodity without taking physical delivery. Sponsors of gold ETFs buy a matching amount of the commodity from the market to keep in vaults.
"It will be linked to a dollar-based gold price, but it has not been decided yet if it will be listed on the Dubai Gold and Commodities Exchange or the Dubai International Finance Exchange," he said.
The Dubai ETFs will comply with Islamic law or sharia which bans the charging of interest, equating it with usury, and prohibits investment in businesses that trade in alcohol or gambling, he added.
Dubai is a long-established market for gold bullion and jewellery, wholesale and retail, fuelled by strong demand from the Arab world and India, the world's main gold market.
The Gulf commercial hub launched the region's first gold futures exchange in 2005 as the economies of Gulf Arab nations boomed on a windfall oil income.
U.S.-based StreetTRACKS gold shares (GLD.N: Quote, Profile, Research) is the world's largest gold ETF accounting for more than 80 percent of the metal held by all such funds.
India - Bargain hunt may fuel metals
Base metals are likely to rebound this week amid high volatility as traders are expected to go on a buying spree to take the advantage of lower prices. Speculators have already started booking new positions since late Friday evening on the Comex division of the New York Mercantile Exchange (Nymex) following a 3.4 per cent second quarterly growth rate in the US economy.
“All base metals have bottomed out and are now likely to bounce back,” said an analyst.
Last Friday, the September contracts on the Nymex rebounded marginally across the board on fresh buying from hedge funds over the weekend.
Base metals led by nickel and lead sharply declined last week on speculators betting more towards crude oil in the wake of the third straight weekly decline in the US oil inventories. Traders are of the opinion that hedge funds have temporarily shifted to crude oil, leaving the base metals high and dry.
Crude oil for September delivery rose $2.32 cents on Friday to $75.88 a barrel on the Nymex and indications are that the commodity would advance further to hit the psychological barrier of $78 very soon.
Crude oil supplies fell 1.1 million barrels to 351 million barrels last week, the US Energy Department report showed. Inventories in Cushing, Oklahoma, the main US supply hub, fell 1.38 million barrels to 212.4 million barrels, the lowest level since February 2006.
On the LME, lead headed for its biggest weekly drop in eight months to $3,128 a tonne on Friday, witnessing a decline of 8.40 per cent. Lead surged more than 15 per cent last week after an explosion cut output at Doe Run Resources Corp’s Herculaneum smelter on July 13. The smelter will resume full production next month and the lost supply is probably small.
Nickel at $31,515 a tonne slumped by 9.41 per cent on rising inventories on the LME. The metal, mostly used as an alloy in stainless steel, also fell after steelmakers said they were slowing purchases after prices reached a record $51,800 a tonne on May 9.
Meanwhile, other industrial metals such as copper, aluminium, zinc and tin followed suit and witnessed a fall between 1.5 and 4 per cent during the week on a slowdown in home building that hurt demand in the United States, the largest consumer of metals after China. Home resales in the United States fell for a fourth straight month in June, a sign that housing remained mired in its worst slump in 16 years.
“All base metals have bottomed out and are now likely to bounce back,” said an analyst.
Last Friday, the September contracts on the Nymex rebounded marginally across the board on fresh buying from hedge funds over the weekend.
Base metals led by nickel and lead sharply declined last week on speculators betting more towards crude oil in the wake of the third straight weekly decline in the US oil inventories. Traders are of the opinion that hedge funds have temporarily shifted to crude oil, leaving the base metals high and dry.
Crude oil for September delivery rose $2.32 cents on Friday to $75.88 a barrel on the Nymex and indications are that the commodity would advance further to hit the psychological barrier of $78 very soon.
Crude oil supplies fell 1.1 million barrels to 351 million barrels last week, the US Energy Department report showed. Inventories in Cushing, Oklahoma, the main US supply hub, fell 1.38 million barrels to 212.4 million barrels, the lowest level since February 2006.
On the LME, lead headed for its biggest weekly drop in eight months to $3,128 a tonne on Friday, witnessing a decline of 8.40 per cent. Lead surged more than 15 per cent last week after an explosion cut output at Doe Run Resources Corp’s Herculaneum smelter on July 13. The smelter will resume full production next month and the lost supply is probably small.
Nickel at $31,515 a tonne slumped by 9.41 per cent on rising inventories on the LME. The metal, mostly used as an alloy in stainless steel, also fell after steelmakers said they were slowing purchases after prices reached a record $51,800 a tonne on May 9.
Meanwhile, other industrial metals such as copper, aluminium, zinc and tin followed suit and witnessed a fall between 1.5 and 4 per cent during the week on a slowdown in home building that hurt demand in the United States, the largest consumer of metals after China. Home resales in the United States fell for a fourth straight month in June, a sign that housing remained mired in its worst slump in 16 years.
India - Analysts differ on gold prices
Global gold prices are likely to decline below the $650 an ounce mark in a fortnight. In the domestic market, however, the yellow metal is likely to rebound and move in the range of Rs 8,700 to Rs 8,900 per 10 gram during the same period.
Meanwhile, there are differences of opinion between spot and futures market analysts. Spot market analysts are bullish on gold in the wake of a growing demand against the backdrop of India International Jewellery Show 2007 (IIJS 2007) scheduled for the next month-end. But futures market experts believe the yellow metal would break the downward barrier of Rs 8,000 in the weeks to come.
Gold is currently quoted at $661.50 an ounce in London and Rs 8,765 (.999 purity) and Rs 8,720 (.995 purity), almost unchanged from the previous day, in the Mumbai bullion market.
Gold for August deliver on the MCX, however, is quoted at Rs 8,685 per 10 gram. Analysts believe that weak fundamentals may push the yellow metal down by at least Rs 20-25 in a few days, with the trend continuing in the long run.
Prithviraj Kothari, director, Riddhi Siddhi Bullion, feels that the forthcoming IIJS 2007 exhibition will spur the jewellery industry and boost the demand for gold ornaments, thereby fuelling prices. Meanwhile, the seasonal demand was gradually picking up and might take gold prices to Rs 9,300-9,500 by Diwali, added Kothari.
However, futures market analysts are bearish on the yellow metal. With the developing countries’ currencies appreciating, a decline in global prices would pull down the domestic prices below Rs 8,000 by Diwali, they added.
Meanwhile, gold prices remained unchanged in Asia on Monday after the biggest weekly decline in almost two months on Friday on concern that the global economic growth may slow down, reducing the metal’s appeal as a hedge against inflation. Gold for immediate delivery was little changed at $661.50 an ounce in Singapore compared with $661.20 an ounce on Friday, the lowest close since July 11.
On the Tokyo Commodity Exchange, gold for June delivery fell 16 yen, or 0.6 per cent, to 2,549 yen a gram ($669 an ounce) at the end of the morning session. The yellow metal for December delivery was up $1.30, or 0.2 per cent, at $673.60 on the Comex division of the New York Mercantile Exchange.
Gold prices fell 3.3 per cent last week amid a $2.1 trillion world stock market rout and concern that US subprime mortgage losses may slow economic growth. Investors usually buy gold when raw material prices rise to preserve wealth.
Meanwhile, there are differences of opinion between spot and futures market analysts. Spot market analysts are bullish on gold in the wake of a growing demand against the backdrop of India International Jewellery Show 2007 (IIJS 2007) scheduled for the next month-end. But futures market experts believe the yellow metal would break the downward barrier of Rs 8,000 in the weeks to come.
Gold is currently quoted at $661.50 an ounce in London and Rs 8,765 (.999 purity) and Rs 8,720 (.995 purity), almost unchanged from the previous day, in the Mumbai bullion market.
Gold for August deliver on the MCX, however, is quoted at Rs 8,685 per 10 gram. Analysts believe that weak fundamentals may push the yellow metal down by at least Rs 20-25 in a few days, with the trend continuing in the long run.
Prithviraj Kothari, director, Riddhi Siddhi Bullion, feels that the forthcoming IIJS 2007 exhibition will spur the jewellery industry and boost the demand for gold ornaments, thereby fuelling prices. Meanwhile, the seasonal demand was gradually picking up and might take gold prices to Rs 9,300-9,500 by Diwali, added Kothari.
However, futures market analysts are bearish on the yellow metal. With the developing countries’ currencies appreciating, a decline in global prices would pull down the domestic prices below Rs 8,000 by Diwali, they added.
Meanwhile, gold prices remained unchanged in Asia on Monday after the biggest weekly decline in almost two months on Friday on concern that the global economic growth may slow down, reducing the metal’s appeal as a hedge against inflation. Gold for immediate delivery was little changed at $661.50 an ounce in Singapore compared with $661.20 an ounce on Friday, the lowest close since July 11.
On the Tokyo Commodity Exchange, gold for June delivery fell 16 yen, or 0.6 per cent, to 2,549 yen a gram ($669 an ounce) at the end of the morning session. The yellow metal for December delivery was up $1.30, or 0.2 per cent, at $673.60 on the Comex division of the New York Mercantile Exchange.
Gold prices fell 3.3 per cent last week amid a $2.1 trillion world stock market rout and concern that US subprime mortgage losses may slow economic growth. Investors usually buy gold when raw material prices rise to preserve wealth.
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