SINGAPORE (Reuters) -
Gold rose on Monday and stayed within sight of a 16-month high of $717 an ounce struck last week with expectations running high for the U.S. Federal Reserve to cut interest rates.
The Fed is widely expected to trim its benchmark interest rate by at least 25 basis points on Tuesday to help cushion the economy from the impact of the credit squeeze and housing slump. Lower interest rates boost gold's safe-haven appeal.
Platinum and palladium rebounded from early lows to track gains in bullion, but some gold jewellers in Asia refrained from buying ahead of the Fed's policy meeting, said dealers.
Spot gold rose to $710.30/711.10 an ounce from $707.30/708.10 an ounce late in New York on Friday on fund and stop-loss buying as the euro held within striking distance of last week's all-time highs around $1.3927.
"My gut feeling is when the dust really starts to settle in this subprime issue, gold will be even more attractive as an asset which is not really subject to a credit crunch," said Darren Heathcote of Investec Australia in Sydney.
"It's holding on to its safe haven status for the time being. Physical buying is still relatively strong," he said.
Gold, used in jewellery and as an investment tool, has rebounded around 10 percent from a seven-week low reached in mid-August. It hit a low of $641.10, when investors sold gold to raise cash to cover margin calls on losses triggered by a meltdown in the U.S. subprime mortgage market.
"I guess $720 is definitely the topside. If we want to see the price hitting $800, which is possible, we need to clear the psychological levels of $720 and $730," said a dealer in Singapore.
Gold hit an all-time high of $850 an ounce, fixed in London on Jan. 21, 1980.
Some dealers said Friday's rally was also ignited by news Britain's financial authorities stepped in to rescue mortgage lender Northern Rock as the group fell victim to the sharp rise on borrowing costs between banks.
"The market has seen bits and pieces of demand, although buying interest seems to be subsiding at around $710. It looks like jewellers are reluctant to do anything right now," said a dealer in Hong Kong.
"Gold will probably move in a range of $708 to $712 today.
I am a bit bullish but I think there's a big pressure on the upside," he said.
The euro was steady at $1.3878 on Monday but hovered near last week's all-time highs Measured against a basket of major currencies, the dollar touched a 15-year low of 79.30 last week before bouncing modestly to 79.72.
Former Fed Chairman Alan Greenspan said in an interview published on Monday the Fed would have to raise interest rates to double-digit levels in coming years to thwart inflation.
But double-digit rates, which have not been seen since the 1980s, would not be a long-term fixture, Greenspan said in an interview with USA Today conducted on Friday.
Japanese financial markets were closed on Monday for a public holiday. Benchmark August 2008 gold futures on the Tokyo Commodity Exchange ended unchanged at 2,634 yen per gram on Friday.
Platinum hit intraday low of $1,262 an ounce, its lowest since Aug. 31 in the absence of Japanese players. It later rebounded to $1,299/1,304 an ounce, higher than $1,297/1,302 late in New York.
Japan's Daihatsu Motor Co. Ltd. said on Friday it had developed a technology to make fuel cells without platinum, the precious metal used in the electrolyte process in existing hydrogen-based fuel cells.
Palladium fell to $329/333 an ounce from $330/334 late in New York. It fell as low as $326 on Monday, its lowest level in nearly three weeks.
Silver inched up to $12.59/12.62 an ounce from $12.52/12.57 an ounce.
Monday, September 17, 2007
Platinum better long term than gold?
JOHANNESBURG -
Platinum stocks are preferred as a medium to long-term investment over gold which recently saw powerful rallies in its price. This comes as platinum supply and demand fundamentals are firm and platinum companies are set to grow production volumes.
Mike Townshend, resource analyst at Foord Asset Management, told Mineweb today that platinum stocks would outperform gold over the next two to five years as platinum demand was driven by environmental legislation (62%) and the Chinese jewellery market (22%).
Platinum companies have the underground and capital resources to boost their production volumes and take advantage of demand growth.
This compared to gold companies which did not only have declining production but also had to contend with ageing mines and infrastructure and an increasing cost base.
"The rate of decline in gold production is slowing, but it is difficult to see where growth volumes will come from," he said.
Gold demand - over 60% of it - is driven by jewellery demand emanating mainly from India. But this demand is not certain as it depends on the success of India's harvest crops.
"Gold companies could certainly benefit from the stronger gold price if they were able to control costs.
"But South African gold companies have showed an alarming trend of cost increases as mines age and they mine further away from shafts, wage settlements exceed inflation, while productivity does not improve and grades decline."
Townshend said platinum companies had the benefit of by-products rhodium, ruthenium and nickel, which boosted earnings with their stronger prices. Platinum mining did not take place as deep below the surface as gold mining.
"Another factor is that platinum companies are generating sufficient money to pay good dividends and have adequate cash-flow to finance growth."
Townshend added that while both gold and platinum metals prices have rocketed, earnings of gold companies have not grown over the past ten years. The earnings of platinum companies grew more than tenfold over the same period.
He said the platinum sector was an example of an industry where earnings growth led share price growth.
"Between 1997 and 2007, when earnings from platinum companies grew more rapidly compared to gold companies, platinum shares outperformed gold shares by more than seven times.
"We have preferred platinum to gold for at least five years, and continue to hold this view."
Platinum stocks are preferred as a medium to long-term investment over gold which recently saw powerful rallies in its price. This comes as platinum supply and demand fundamentals are firm and platinum companies are set to grow production volumes.
Mike Townshend, resource analyst at Foord Asset Management, told Mineweb today that platinum stocks would outperform gold over the next two to five years as platinum demand was driven by environmental legislation (62%) and the Chinese jewellery market (22%).
Platinum companies have the underground and capital resources to boost their production volumes and take advantage of demand growth.
This compared to gold companies which did not only have declining production but also had to contend with ageing mines and infrastructure and an increasing cost base.
"The rate of decline in gold production is slowing, but it is difficult to see where growth volumes will come from," he said.
Gold demand - over 60% of it - is driven by jewellery demand emanating mainly from India. But this demand is not certain as it depends on the success of India's harvest crops.
"Gold companies could certainly benefit from the stronger gold price if they were able to control costs.
"But South African gold companies have showed an alarming trend of cost increases as mines age and they mine further away from shafts, wage settlements exceed inflation, while productivity does not improve and grades decline."
Townshend said platinum companies had the benefit of by-products rhodium, ruthenium and nickel, which boosted earnings with their stronger prices. Platinum mining did not take place as deep below the surface as gold mining.
"Another factor is that platinum companies are generating sufficient money to pay good dividends and have adequate cash-flow to finance growth."
Townshend added that while both gold and platinum metals prices have rocketed, earnings of gold companies have not grown over the past ten years. The earnings of platinum companies grew more than tenfold over the same period.
He said the platinum sector was an example of an industry where earnings growth led share price growth.
"Between 1997 and 2007, when earnings from platinum companies grew more rapidly compared to gold companies, platinum shares outperformed gold shares by more than seven times.
"We have preferred platinum to gold for at least five years, and continue to hold this view."
U.S. Forex Market Commentary
EURO
The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3850 level and was capped around the $1.3885 level. Today’s range was quite thin as traders were loath to establish new ranges ahead of tomorrow’s Federal Open Market Committee interest rate decision. Most traders expect the Fed will reduce the federal funds target rate by +25bps or +50bps on account of the recent turmoil in the financial markets that was precipitated by the subprime mortgage credit shakeout. U.S. Treasury Secretary Paulson reiterated the ongoing repricing of risk in the credit market “will be with us for a while” but that the U.S. is doing so “against a backdrop of a strong global economy.” Data released in the U.K. today saw the September Empire State manufacturing index fall to 14.7, far below its reading of 25.1 in August. In eurozone news, European Central Bank officials continued to defend their policymaking activities from ongoing criticism from French President Sarkozy. ECB member Liebscher reiterated inflationary risks are on the upside. The German government reported Germany’s jobless total could fall to 3.5 million this month or next month. It was also reported that the EMU-13 July trade surplus printed at €4.6 billion from a revised €7.6 billion in June. Euro bids are cited around the US$ 1.3620 level.
JPN/CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥114.65 level and was capped around the ¥115.35 level. Technically, today’s intraday low was just above the 23.6% retracement of the move from ¥124.15 to ¥111.60. Japanese financial markets were closed for a market holiday overnight and will reopen tomorrow. All eyes are on the Japanese political landscape where a majority of lawmakers from the ruling Liberal Democratic Party are said to support the moderate Yasuo Fukuda in next Sunday’s party presidential election over challenger Taro Aso. The big question on traders’ minds is how a win by either candidate would impact Japan’s national finances and how the yen may react. Most traders believe Bank of Japan will push forth a +25bps hike in the overnight call rate before the end of the current fiscal year in March 2008, also around the time that BoJ Governor Fukui leaves office. Dollar bids are cited around the ¥113.70 level. The euro came off vis-à-vis the yen as the single currency tested bids around the ¥159.00 figure and was capped around the ¥160.15 level. The British pound and Swiss franc weakened vis-à-vis the yen as the crosses tested bids around the ¥229.05 and ¥96.60 levels, respectively. The Chinese yuan came off vis-à-vis the U.S. dollar as the greenback closed at CNY 7.5227 in the over-the-counter market, up from CNY 7.5175.
STERLING
The British pound sold off significantly vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.9915 level and was capped around the $2.0090 level. Technically, today’s intraday low was right around the 50% retracement of the move from $1.9180 to $2.0655. Traders are driving sterling lower on account of ongoing problems at U.K. bank Northern Rock where customers withdrew sizable amounts of deposits over the weekend. Northern Rock is the U.K.’s fifth-largest home lender and received emergency funding from the Bank of England last week. Short sterling futures are now pricing in a reduction in Bank of England’s repo rate over the coming months, a stark contrast to just a few weeks ago when traders believed the MPC would lift the repo rate by +25bps to 6.00% by the end of the year. Traders await this month’s MPC meeting minutes followed by testimony from Bank of England Governor King on Thursday. The problems being faced in the U.K. money market are exemplified by the spike in short-term funding costs. The overnight sterling deposit rate jumped to 6.47% from 5.87% and the one-week rate climbed to 6.21% from 5.98%. These increases reflect the premiums being paid by financial institutions looking to secure funds in the money market. Cable bids are cited around the US$ 1.9920 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.6955 level and was supported around the ₤0.6905 level.
SWISS
The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.1845 level and was capped around the CHF 1.1900 figure. Technically, today’s intraday high was right around the 23.6% retracement of the move from CHF 1.2215 to CHF 1.1800. Q2 industrial production data will be released in tomorrow. Dollar offers are cited around the CHF 1.1960 level. The euro and British pound lost ground vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.6440 and CHF 2.3645 levels, respectively.
The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3850 level and was capped around the $1.3885 level. Today’s range was quite thin as traders were loath to establish new ranges ahead of tomorrow’s Federal Open Market Committee interest rate decision. Most traders expect the Fed will reduce the federal funds target rate by +25bps or +50bps on account of the recent turmoil in the financial markets that was precipitated by the subprime mortgage credit shakeout. U.S. Treasury Secretary Paulson reiterated the ongoing repricing of risk in the credit market “will be with us for a while” but that the U.S. is doing so “against a backdrop of a strong global economy.” Data released in the U.K. today saw the September Empire State manufacturing index fall to 14.7, far below its reading of 25.1 in August. In eurozone news, European Central Bank officials continued to defend their policymaking activities from ongoing criticism from French President Sarkozy. ECB member Liebscher reiterated inflationary risks are on the upside. The German government reported Germany’s jobless total could fall to 3.5 million this month or next month. It was also reported that the EMU-13 July trade surplus printed at €4.6 billion from a revised €7.6 billion in June. Euro bids are cited around the US$ 1.3620 level.
JPN/CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥114.65 level and was capped around the ¥115.35 level. Technically, today’s intraday low was just above the 23.6% retracement of the move from ¥124.15 to ¥111.60. Japanese financial markets were closed for a market holiday overnight and will reopen tomorrow. All eyes are on the Japanese political landscape where a majority of lawmakers from the ruling Liberal Democratic Party are said to support the moderate Yasuo Fukuda in next Sunday’s party presidential election over challenger Taro Aso. The big question on traders’ minds is how a win by either candidate would impact Japan’s national finances and how the yen may react. Most traders believe Bank of Japan will push forth a +25bps hike in the overnight call rate before the end of the current fiscal year in March 2008, also around the time that BoJ Governor Fukui leaves office. Dollar bids are cited around the ¥113.70 level. The euro came off vis-à-vis the yen as the single currency tested bids around the ¥159.00 figure and was capped around the ¥160.15 level. The British pound and Swiss franc weakened vis-à-vis the yen as the crosses tested bids around the ¥229.05 and ¥96.60 levels, respectively. The Chinese yuan came off vis-à-vis the U.S. dollar as the greenback closed at CNY 7.5227 in the over-the-counter market, up from CNY 7.5175.
STERLING
The British pound sold off significantly vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.9915 level and was capped around the $2.0090 level. Technically, today’s intraday low was right around the 50% retracement of the move from $1.9180 to $2.0655. Traders are driving sterling lower on account of ongoing problems at U.K. bank Northern Rock where customers withdrew sizable amounts of deposits over the weekend. Northern Rock is the U.K.’s fifth-largest home lender and received emergency funding from the Bank of England last week. Short sterling futures are now pricing in a reduction in Bank of England’s repo rate over the coming months, a stark contrast to just a few weeks ago when traders believed the MPC would lift the repo rate by +25bps to 6.00% by the end of the year. Traders await this month’s MPC meeting minutes followed by testimony from Bank of England Governor King on Thursday. The problems being faced in the U.K. money market are exemplified by the spike in short-term funding costs. The overnight sterling deposit rate jumped to 6.47% from 5.87% and the one-week rate climbed to 6.21% from 5.98%. These increases reflect the premiums being paid by financial institutions looking to secure funds in the money market. Cable bids are cited around the US$ 1.9920 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.6955 level and was supported around the ₤0.6905 level.
SWISS
The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.1845 level and was capped around the CHF 1.1900 figure. Technically, today’s intraday high was right around the 23.6% retracement of the move from CHF 1.2215 to CHF 1.1800. Q2 industrial production data will be released in tomorrow. Dollar offers are cited around the CHF 1.1960 level. The euro and British pound lost ground vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.6440 and CHF 2.3645 levels, respectively.
Treasurys fall as focus is on the Fed
NEW YORK (AP) - Treasurys were near the flat line Monday as anxious investors refrained from major moves as they wondered what action the Federal Reserve will take on interest rates on Tuesday.
There was little reaction to the New York Fed's weak Empire State survey for September, which showed a drop to 14.7 from 25.1. While the survey showed a slower pace of growth, all readings over zero indicate expansion. This report, like many other recent data releases, shows some economic deterioration, but the degree of decline is uncertain.
A summer spent monitoring the spread of weakness in the below prime mortgage market has left investors anxious about the condition of the overall economy. This in turn has led to heightened concerns about whether the Fed will drop rates at its Tuesday meeting.
Although many analysts have concluded an interest rate decline is a given, there is disagreement over whether the Fed is more likely to reduce rates by a quarter percentage point or a half percentage point.
In addition, Fed Chairman Ben Bernanke and a lineup of other Fed speakers last week all focused on the strengths of the economy and avoided promising a rate decrease.
And some economists have warned that cheaper money may not be the proper solution to problems in the mortgage and corporate credit markets. Some are even predicing lower rates will lead to an increase in inflation. The fixed-income abhors inflation because it eats into the value of assets.
The benchmark 10-year Treasury note was 3/32 lower at 102 8/32 with a yield of 4.46 percent, not far from its close at 4.48 percent on Friday.
The 2-year note was unchanged at 99-29/32 with a yield of 4.05 percent, matching its Friday closing level.
The 30-year long bond there off morning losses to trade up 4/32 at 104 16/32 with a yield of 4.71 percent, down from 4.81 percent at Friday's close.
Monday's price losses come in the context of a number of recent rallies driven by safe-haven worries linked to weakness in other markets.
"The Treasury market is trading a bit lower, but does it really market whether the market is up or down the day before what is likely the most anticipated Fed meeting of the year?", asked Kevin Giddis, managing director of fixed income at Morgan Keegan.
A new prediction by former Fed leader Alan Greenspan that the embattled housing market will deteriorate even further, with heavier losses for housing prices, contributed to uneasiness among investors.
There was little reaction to the New York Fed's weak Empire State survey for September, which showed a drop to 14.7 from 25.1. While the survey showed a slower pace of growth, all readings over zero indicate expansion. This report, like many other recent data releases, shows some economic deterioration, but the degree of decline is uncertain.
A summer spent monitoring the spread of weakness in the below prime mortgage market has left investors anxious about the condition of the overall economy. This in turn has led to heightened concerns about whether the Fed will drop rates at its Tuesday meeting.
Although many analysts have concluded an interest rate decline is a given, there is disagreement over whether the Fed is more likely to reduce rates by a quarter percentage point or a half percentage point.
In addition, Fed Chairman Ben Bernanke and a lineup of other Fed speakers last week all focused on the strengths of the economy and avoided promising a rate decrease.
And some economists have warned that cheaper money may not be the proper solution to problems in the mortgage and corporate credit markets. Some are even predicing lower rates will lead to an increase in inflation. The fixed-income abhors inflation because it eats into the value of assets.
The benchmark 10-year Treasury note was 3/32 lower at 102 8/32 with a yield of 4.46 percent, not far from its close at 4.48 percent on Friday.
The 2-year note was unchanged at 99-29/32 with a yield of 4.05 percent, matching its Friday closing level.
The 30-year long bond there off morning losses to trade up 4/32 at 104 16/32 with a yield of 4.71 percent, down from 4.81 percent at Friday's close.
Monday's price losses come in the context of a number of recent rallies driven by safe-haven worries linked to weakness in other markets.
"The Treasury market is trading a bit lower, but does it really market whether the market is up or down the day before what is likely the most anticipated Fed meeting of the year?", asked Kevin Giddis, managing director of fixed income at Morgan Keegan.
A new prediction by former Fed leader Alan Greenspan that the embattled housing market will deteriorate even further, with heavier losses for housing prices, contributed to uneasiness among investors.
DJ PRECIOUS METALS: NY Gold Keeps Rising Ahead Of FOMC Meeting
DJ PRECIOUS METALS: NY Gold Keeps Rising Ahead Of FOMC Meeting
By Allen Sykora
Of DOW JONES NEWSWIRES
Anticipation of a Federal Reserve rate cut and comments from former FederalReserve Chairman Alan Greenspan were both cited as catalysts Monday for gainsin the gold and silver futures, analysts said.
December gold rose $6 to $723.80 an ounce on the Comex division of the NewYork Mercantile Exchange. As pit trade was closing, the December contract atthe Chicago Board of Trade was up $5.80 to $723.50.
Comex December silver rose 19.5 cents to $12.90. As it was closing, CBOTDecember silver was up 20 cents to $12.906.
The session comes one day ahead of a much-anticipated meeting of the FederalOpen Market Committee. Gold has been rising for a few weeks now, with thedollar falling, on expectations that policy-setters will trim the federal-fundsrate - at which banks lend to each other - for the first time since 2003.Policy-setters last month trimmed the discount rate - which it charges banksthat borrow directly from the Fed - to 5.75% from 6.25%.
The higher prices in gold and silver come as traders continue to build inexpectations for a fed-funds rate cut on Tuesday, said George Gero, vicepresident with RBC Capital Markets Global Futures.
"The question is whether it will be a quarter-point or a half-point (ratecut)," he said.
Jon Nadler, analyst with Kitco Bullion Dealers, commented that "morerate-cut-expectation-fueled longs piled into the market despite warning flashesin the metals' relative strength indicators."
Shortly after the Comex gold pit closed, the October federal-funds futureswere factoring in an effective rate of 4.88%, which means the financial marketswere fully pricing in a 25-basis-point rate cut plus a 48% probabilitypolicy-setters would trim by an additional 25 basis points. The federal-fundsrate has stood at 5.25% for 15 months.
Short covering was occurring in the run-up to the meeting, said Gero,commenting that fund buying has been occurring over the last several sessions.
"Gold has been continually moving up ever since we've felt the quarter-pointcut was coming," he said. "It could be that you'll have profit-takingafterwards."
Some of gold's strength was the result of comments from former FederalReserve Chairman Alan Greenspan, reported Patrick Lafferty, Commodity TradingAdvisor with MF Global.
Greenspan has given a number of interviews in recent days in conjunction withthe publication of a book that he authored. He has indicated that inflation isa concern down the road, and investors often buy gold as an inflation hedge.
"Greenspan's comments have got to be the catalyst, although energy is up,"said Lafferty. "That's kept what was already a nice technical move alive andwell. We saw a lot of people coming in and adding to their positions."
December gold peaked at $728.90, its strongest level since July 2006. Thenext upside target for December gold is around the $735 area, Lafferty said.
Crude oil's gains were also supportive, noted Lafferty. Shortly after theComex gold pit closed, October crude oil was up $1.09 to $80.19 a barrel.
"Silver got dragged up with gold," said Gero. However, he noted, the metalcontinues to stall just ahead of resistance around the $13 area, although itpeaked at $12.98, its strongest level since Aug. 14.
Meanwhile, October platinum rose $3.40 to $1,302.60 an ounce, while Decemberpalladium gained $1.60 to $335.35 in metals that were described as more subduedthan gold.
The platinum group metals upticked modestly as gold rose, but overallactivity appeared muted, with many participants seemingly on hold ahead ofTuesday's FOMC meeting, said one desk trader.
"It's pretty quiet, as you can imagine, ahead of the Federal Open MarketCommittee meeting tomorrow," he commented.
Gero said these metals may have been held back as the market continues tomonitor labor talks at General Motors.
By Allen Sykora
Of DOW JONES NEWSWIRES
Anticipation of a Federal Reserve rate cut and comments from former FederalReserve Chairman Alan Greenspan were both cited as catalysts Monday for gainsin the gold and silver futures, analysts said.
December gold rose $6 to $723.80 an ounce on the Comex division of the NewYork Mercantile Exchange. As pit trade was closing, the December contract atthe Chicago Board of Trade was up $5.80 to $723.50.
Comex December silver rose 19.5 cents to $12.90. As it was closing, CBOTDecember silver was up 20 cents to $12.906.
The session comes one day ahead of a much-anticipated meeting of the FederalOpen Market Committee. Gold has been rising for a few weeks now, with thedollar falling, on expectations that policy-setters will trim the federal-fundsrate - at which banks lend to each other - for the first time since 2003.Policy-setters last month trimmed the discount rate - which it charges banksthat borrow directly from the Fed - to 5.75% from 6.25%.
The higher prices in gold and silver come as traders continue to build inexpectations for a fed-funds rate cut on Tuesday, said George Gero, vicepresident with RBC Capital Markets Global Futures.
"The question is whether it will be a quarter-point or a half-point (ratecut)," he said.
Jon Nadler, analyst with Kitco Bullion Dealers, commented that "morerate-cut-expectation-fueled longs piled into the market despite warning flashesin the metals' relative strength indicators."
Shortly after the Comex gold pit closed, the October federal-funds futureswere factoring in an effective rate of 4.88%, which means the financial marketswere fully pricing in a 25-basis-point rate cut plus a 48% probabilitypolicy-setters would trim by an additional 25 basis points. The federal-fundsrate has stood at 5.25% for 15 months.
Short covering was occurring in the run-up to the meeting, said Gero,commenting that fund buying has been occurring over the last several sessions.
"Gold has been continually moving up ever since we've felt the quarter-pointcut was coming," he said. "It could be that you'll have profit-takingafterwards."
Some of gold's strength was the result of comments from former FederalReserve Chairman Alan Greenspan, reported Patrick Lafferty, Commodity TradingAdvisor with MF Global.
Greenspan has given a number of interviews in recent days in conjunction withthe publication of a book that he authored. He has indicated that inflation isa concern down the road, and investors often buy gold as an inflation hedge.
"Greenspan's comments have got to be the catalyst, although energy is up,"said Lafferty. "That's kept what was already a nice technical move alive andwell. We saw a lot of people coming in and adding to their positions."
December gold peaked at $728.90, its strongest level since July 2006. Thenext upside target for December gold is around the $735 area, Lafferty said.
Crude oil's gains were also supportive, noted Lafferty. Shortly after theComex gold pit closed, October crude oil was up $1.09 to $80.19 a barrel.
"Silver got dragged up with gold," said Gero. However, he noted, the metalcontinues to stall just ahead of resistance around the $13 area, although itpeaked at $12.98, its strongest level since Aug. 14.
Meanwhile, October platinum rose $3.40 to $1,302.60 an ounce, while Decemberpalladium gained $1.60 to $335.35 in metals that were described as more subduedthan gold.
The platinum group metals upticked modestly as gold rose, but overallactivity appeared muted, with many participants seemingly on hold ahead ofTuesday's FOMC meeting, said one desk trader.
"It's pretty quiet, as you can imagine, ahead of the Federal Open MarketCommittee meeting tomorrow," he commented.
Gero said these metals may have been held back as the market continues tomonitor labor talks at General Motors.
U.S. stocks falter ahead of Fed gathering
NEW YORK (MarketWatch) -- U.S. stocks fell in light trade Monday amid investor nervousness ahead of the Federal Reserve's interest-rate decision Tuesday and as a U.K. lender's ongoing trouble added to worries about the global credit crunch.
"Belief that the Fed will only ease 25 basis points instead of 50 is weighing" on the market, said analysts at Ried Thunberg ICAP.
Trading volumes were lighter than usual, with some investors opting to sit out of the action ahead of the Fed meeting Tuesday.
Volume at the New York Stock Exchange came to 957 million shares, with declining stocks outpacing advancers 11 to 5. At the Nasdaq, more than 1.2 billion shares exchanged hands, and declining issues topped advancing stocks 2 to 1.
Ahead of the opening bell, stock futures maintained their losses after the New York Federal Reserve reported a slight slowdown in manufacturing activity in the New York area in September, with its Empire State Manufacturing index falling to 14.7 points from 25.1 in August.
"Belief that the Fed will only ease 25 basis points instead of 50 is weighing" on the market, said analysts at Ried Thunberg ICAP.
Trading volumes were lighter than usual, with some investors opting to sit out of the action ahead of the Fed meeting Tuesday.
Volume at the New York Stock Exchange came to 957 million shares, with declining stocks outpacing advancers 11 to 5. At the Nasdaq, more than 1.2 billion shares exchanged hands, and declining issues topped advancing stocks 2 to 1.
Ahead of the opening bell, stock futures maintained their losses after the New York Federal Reserve reported a slight slowdown in manufacturing activity in the New York area in September, with its Empire State Manufacturing index falling to 14.7 points from 25.1 in August.
Crude futures set another record atop $80
Crude-oil futures climbed to another record level above $80 a barrel Monday, overcoming earlier weakness as traders fretted about near-term risks to global supplies and bet that a Federal Reserve cut in interest rates will help lift energy demand.
"The market is gaining confidence that a Fed rate cut will be a good omen for further energy demand," said Phil Flynn, senior analyst at Alaron Trading.
Federal Open Market Committee policymakers will meet Tuesday. Among Fed watchers, prospects for a rate cut are regarded as a virtual certainty.
Market economists mostly believe the central bank will cut the federal funds rate by a quarter of a percentage point, to 5%. It would be the first U.S. rate cut since June 2003. See The Fed.
On the New York Mercantile Exchange, crude for October delivery tacked on $1.47 to close at $80.57 a barrel, a gain of 1.9%.
The contract had dropped to a low of $78.80 early in the session but then rebounded as high as $80.70 -- a level never before seen on the exchange for a front-month contract.
On Friday, crude oil fell 99 cents at $79.10 a barrel, backing off Thursday's previous record-high close of $80.09. The contract rose as high as $80.36 in electronic trading Friday.
Goldman Sachs said its analysts raised their year-end forecast for oil prices to $85 a barrel for 2007 and pegged the year-end price at $95 a barrel for 2008.
"Near term, they believe the risk of oil breaching $90/bbl is high," according to a research note released Sunday by the brokerage.
Goldman has long envisioned a so-called "super spike" as being in the cards for crude prices.
"The core drivers of our analysts' long-standing super-spike framework remain firmly intact: spare capacity throughout the oil value chain remains limited, supply is struggling to grow, and demand growth continues," the note said.
"The market is gaining confidence that a Fed rate cut will be a good omen for further energy demand," said Phil Flynn, senior analyst at Alaron Trading.
Federal Open Market Committee policymakers will meet Tuesday. Among Fed watchers, prospects for a rate cut are regarded as a virtual certainty.
Market economists mostly believe the central bank will cut the federal funds rate by a quarter of a percentage point, to 5%. It would be the first U.S. rate cut since June 2003. See The Fed.
On the New York Mercantile Exchange, crude for October delivery tacked on $1.47 to close at $80.57 a barrel, a gain of 1.9%.
The contract had dropped to a low of $78.80 early in the session but then rebounded as high as $80.70 -- a level never before seen on the exchange for a front-month contract.
On Friday, crude oil fell 99 cents at $79.10 a barrel, backing off Thursday's previous record-high close of $80.09. The contract rose as high as $80.36 in electronic trading Friday.
Goldman Sachs said its analysts raised their year-end forecast for oil prices to $85 a barrel for 2007 and pegged the year-end price at $95 a barrel for 2008.
"Near term, they believe the risk of oil breaching $90/bbl is high," according to a research note released Sunday by the brokerage.
Goldman has long envisioned a so-called "super spike" as being in the cards for crude prices.
"The core drivers of our analysts' long-standing super-spike framework remain firmly intact: spare capacity throughout the oil value chain remains limited, supply is struggling to grow, and demand growth continues," the note said.
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