IMF sale to India helps gold leap to new all-time highs.
03 November 2009
Risk aversion weighs on gold futures
27 October 2009
Gold leaps to new all-time high on concerns about dollar
08 October 2009
Gold bounds higher after G7 offers NO support for dollar!
05 October 2009
The greenback fell as much as 0.5 percent against a basket of six major currencies. “Gold is finding support out of dollar weakness,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “Hard breaks have found nothing but buying. Gold is building stamina to take out the old record.”
The COMEX December gold futures contract closed up $13.50 Monday at $1017.80, trading between $1001.60 and $1018.90
IMF to sell 403 tonnes of gold to boost lending to poor
20 September 2009
The IMF said that gold sales “will also increase the fund’s resources for lending to low-income countries,” a strategy that won board backing in July.
The amount of gold is one-eighth of the current holdings of the Washington-based IMF, one of the world’s biggest holders of the precious metal.
“I am delighted that the executive board has given its overwhelming backing to a strictly limited sale of fund gold to put the financing of the IMF on a sound long-term footing, and enable us to step up much-needed concessional lending to the poorest countries,” IMF managing director Dominique Strauss-Kahn said in the statement.
“These sales will be conducted in a responsible and transparent manner that avoids disruption of the gold market,” he said.
The fund is required by its Articles of Agreement to conduct all gold sales at market prices, including direct sales to official holders.
The IMF did not state the value of the gold to be sold but based on the current bullish market price for the metal, it is estimated the sale would fetch 13 billion dollars.
Under the approved plan, the IMF would offer to sell gold directly to central banks “or other official sector holders if there were to be interest from such holders.”
The IMF said such transactions would redistribute official gold holdings without changing total official holdings.
If the public sector demand is insufficient, the IMF said it could conduct the gold sales “on-market in a phased manner over time,” in line with an approach already followed by central banks.
The IMF would be constrained by the overall ceilings agreed by the central banks, which currently is 400 tonnes annually and 2,000 tonnes in total over the next five years starting on September 27.
The IMF said it “will inform markets before any on-market sales commence” and “report regularly to the public on the progress with the gold sales.”
In July, with the world economy struggling to pull out of the worst recession in six decades, the IMF announced it would increase its lending to poor countries to 17 billion dollars by 2014, including 8.0 billion in the coming two years.
That compares with an annual average of one billion dollars in the 2006-2008 period, and three billion dollars in the first half of 2009.
The IMF also had decided to cancel interest payments owed by poor countries through end-2011 and reform lending practices to make loans quickly available, at higher ceilings on amounts and with more flexible conditions.
Gold eases back toward $1000 as dollar strengthens
14 September 2009
Gold rests on profit taking before holiday
04 September 2009
Gold slightly higher in trading before Federal reserve statement.
13 August 2009
Why Gold is due for a “Spectacular Rally”
19 July 2009 – By Ian Cooper
There’s always a bull market somewhere. . .
Right now could be the most profitable time to be a gold investor, according to Brian Hicks, publisher of Wealth Daily.
Sure, in recent months, gold was back around $1,000 an ounce and got shot down.
But we think we’ll see $1,000 again. Heck, we could even see $1,500 to $1,600 on consideration of a second stimulus and growing, unsustainable debt, to which dollar flooding has become the only solution.
Mark these words: now is the opportune time to buy gold.
It’s virtually begging to be bought, as we enter the third and final stage of the correction in gold stocks. We’re talking about the potential to see a 1970s-style final stage 750% run in gold.
Gold Prices Are Due for a Prolonged Rally as the Recession Deepens
So says Peter Schiff, the financial guru who (along with us) predicted the subprime meltdown and ensuing recession. “If you really want to grow your wealth, you should own gold in the mining sector. With gold stocks, there’s obviously a lot of leverage to higher gold prices,” he says.
“With gold stocks, there’s obviously a lot of leverage to higher gold prices. As millions or billions of people discover gold as a store of value and as a way to escape inflation, there’s going to be tremendous demand and somebody’s going to have to supply that demand. It’s obviously going to have to be mined,” he says. “So the companies that have gold and mine it are going to see profit margins explode.”
And the scenario will likely be strengthened, as strong demand outweighs global output. In fact, world gold production has declined since peaking in 2001, despite gold’s $600 rise.
Gold eases higher as U.S. economic data raises inflation concerns
15 July 2009 – August gold futures added to the prior day’s rise after data showed the U.S. Producer Price Index rose to 1.8% in June. The run higher came “despite significant gains in equities, indicating gold does not act as a safe haven at present, but is primarily driven by U.S. dollar movements. The latter came under pressure again, as improving equities drove risk aversion down, which in turn provided support for gold,” said Barbara Lambrecht, an analyst at Commerzbank.
Gold advanced as rising U.S. retail sales brightened the economic outlook, boosting demand for bullion as an alternative investment and a hedge against inflation. “Gold is higher on risk appetite and on technical support sparked by the market’s failure to follow through with last week’s break of the $915 level,” said Tom Pawlicki, an MF Global Inc. analyst in Chicago.
The consensus-beating rise in the U.S. PPI, twice as big as expected, is also reigniting fears over rising inflation. “(Gold) fell last week on commodities liquidation, but held above $900, which is good,” said Simon Weeks, head of precious metals. “Now buyers are back as they focus on an alternative to currencies.”
Gold, oil down as dollar rises
30 June 2009 – The combination of dollar strength plus month- and quarter-end long liquidation sent gold futures sharply lower Tuesday. “A lot of it is dollar-related,” said Frank Cholly, senior market strategist with Lind-Waldock. “We saw a key reversal in the dollar.” The end of the month and quarter were also key influences in gold’s decline, said Frank Lesh, broker and futures analyst with FuturePath Trading. Funds are liquidating to capture profits in not only gold but a wide range of commodities. “Commodities in general are taking a bit of a beating today,” he said. “Crude oil has given back all of its gains from yesterday.” August crude oil was down $2.42 to $69.07.
Gold up slightly as dollar weakens; China advocates new global reserve currency
27 June 2009 – Gold futures managed a small gain Friday, boosted by the softer tone in the U.S. dollar but backing down from the session highs on profit-taking ahead of the weekend. August gold rose $1.50 to settle at $941 on the Comex division of the New York Mercantile Exchange. Shortly before gold closed, the dollar index was down 0.750 point to 79.940, which tends to underpin gold. Still, gold backed down from its strongest levels even as the dollar remained on the defensive. “It looks like some profit-taking after prices headed higher from the middle of the week,” said Carlos Sanchez, associate director of research with CPM Group. The initial rise occurred on a day when the U.S. dollar weakened partly in response to comments from the People’s Bank of China saying it will push for reform of the international currency system to make it more diversified and reduce over-reliance on the current reserve currencies, primarily the dollar. This particularly caught the eye of gold traders a day after a senior economic researcher in the Communist Party expressed concern about the dollar and said gold could be a better alternative.
Gold could receive a shot in the arm as China and some other central banks recently indicated they would consider to diversify their reserves into a basket of major currencies out of the dollar. However, market watchers said it was unlikely that the dollar’s world reserve currency status would be challenged in the foreseeable future. The price of gold has largely moved in a broad range between $920 and $940 this week, as the combination of the resurgent dollar and easing inflation worries put a damper on bullion’s rise. Analysts said that the recent encouraging U.S. data had hampered gold’s rise, as the danger of fresh crises in financial markets appeared less imminent. For next week, the metal should see less liquidity and more short-term volatility because of thinner volume related to the U.S. Independence Day and Canada Day holidays, said George Gero, vice president of RBC Capital Markets Global Futures.
Gold flat while dollar and oil both down
19 June 2009 – Gold futures finished slightly mixed Friday while continuing their recent consolidation on a day when the dollar and crude oil both fell, sending the metal conflicting signals. Gold has been confined to a range of less than $20 over the past five trading days – much less than volatility in months past when moves of more than $20 sometimes occurred in a single day. “I see a tug-of-war,” said George Gero, vice president with RBC Capital Markets Global Futures. “We’re not making headway up or down.” He cited offsetting factors. For instance, as gold was closing, the dollar index was down 0.488 point to 80.121. This tends to support gold. However, crude oil was down $1.03 to $70.34 a barrel after earlier being as high as $72.30. Falls in this commodity often pressure others, including gold.
Gold futures ended a tad higher on Friday, but tamed inflation worries and the dollar’s recent strength could limit the metal to a narrow trading range ahead of a U.S. Federal Reserve meeting next week. U.S. August gold futures settled up $1.60 at $936.20 on the COMEX division of the New York Mercantile Exchange. “If you are looking at the ups and downs of gold in its narrow trading range, it is more or less a reflection of the swings in the euro/dollar exchange rate,” said Peter Fertig, a consultant at Quantitative Commodity Research in Germany. Meanwhile, the gold market shook off news that the U.S. Senate on Thursday approved a bill that supports a planned sale of 400 tonnes (12.97 million ounces) of gold by the International Monetary Fund. U.S. congressional approval is needed before the U.S. representative on the IMF’s board can support the sale of the gold. Market watchers expect the gold sale would be gradual and could be incorporated into the Central Bank Gold Sale agreement to minimize interruption in the open market. Traders will now focus on a two-day policy and interest-setting meeting by the Federal Reserve next week.
Gold trades sideways as dollar steady
19 June 2009 – Gold futures meandered sideways Thursday before finishing modestly lower. The metals are largely consolidating at the moment as the dollar does likewise, said traders and analysts. As of gold’s close, the dollar index was higher but essentially sideways as the high and low for the session were contained within Wednesday’s trading range. “It seems like we do have physical demand [in gold] on dips,” said Dave Meger, senior metals analyst at Alaron Trading. But otherwise, demand has not been particularly strong since the market is in the “summer doldrums.” Gold seems to be awaiting a fresh catalyst, whether it be a big move in either equities or the foreign-exchange market, observers said. The metal may well get a bounce if the stock market should reverse back lower again, which could lead to renewed flight-to-safety buying in gold.
Precious metals like gold were little changed as the dollar held fairly steady. Investors have been moving into commodities in recent weeks amid a steady decline in the dollar. But with such small moves in the U.S. currency Thursday, investors had little reason to buy. On Thursday, the euro traded at $1.3970, up from $1.3960 late Wednesday in New York. “We’re not seeing any real impetus from the dollar,” said Dave Meger, a gold analyst at Alaron. “We have seen physical demand but just not enough to drive the market higher.” On the New York Mercantile Exchange, gold for August delivery slipped $1.40 to settle at $934.60. Oil prices added 34 cents to settle at $71.37 a barrel.
In Iran, the second-largest oil producer in the Organization of Petroleum Exporting Countries, former Prime Minister Mir Hossein Mousavi joined a rally in Tehran today to protest his defeat in a disputed presidential election on June 12, state-run Press TV said. Oil prices “will hold up heading into the weekend in light of the very unsettled Iranian situation,” Edward Meir, an MF Global Ltd. analyst in Darien, Connecticut, said in a report. “The next shoe to drop would be for the opposition to call for national strikes. In such a case, oil prices would be much more responsive to the upside, and we could see spillover strength in metals as well.” Some investors buy precious metals as a store of value at times of political instability, or as a hedge against inflation when the dollar falls and oil gains.
Gold, oil down as dollar rises before G8 meeting.
15 June 2009 – Fund selling moved gold futures sharply lower Friday as the U.S. dollar advanced. With the strength in the dollar, profit-taking ahead of the weekend was pressuring the metal, said Frank Lesh, broker and futures analyst with FuturePath Trading. The dollar rose after European Central Bank President Jean-Claude Trichet said the economic situation is still difficult and unpredictable. Those comments came shortly after data showing euro-zone industrial production slumped to a fresh low for the year in April. The dollar also found support from comments published Friday by Japanese Finance Minister Kaoru Yosano, who told Bloomberg News his government firmly supports U.S. policies and the soundness of the country’s debt.
The U.S. Dollar Index, a six-currency gauge of the greenback’s value, rose as much as 1.4 percent after Japanese Finance Minister Kaoru Yosano said his nation’s confidence in U.S. debt is “unshakable.” In a June 10 interview, Yosano also said the dollar’s status as the world’s reserve currency isn’t threatened. The dollar’s rise “put a little bit of pressure on gold,” Bernard Sin, the head of currency and metals trading at Swiss refiner MKS Finance SA, said by telephone from Geneva. “The dollar may rebound in the short term, but longer term, it’s going to continue to weaken.” Some investors buy gold as a store of value in times of heightened international tensions and sell the metal when those tensions ease. In Iran, voters went to polls today as President Mahmoud Ahmadinejad sought a second term, touting accomplishments including advancing the country’s nuclear and aerospace technologies. Those steps have raised concerns in the West that Iran is developing atomic weapons and long-range missiles capable of reaching Israel and parts of Europe. “Pressure may also be coming from early news that a moderate candidate” may win, Tom Pawlicki, an MF Global analyst in Chicago, said by e-mail. “Such news would be bearish for gold.”
U.S. August futures settled down $21.30, or 2.2 per cent, at $940.70 on the Comex division of the New York Mercantile Exchange. Crude oil took a breather to end about 1 per cent down at $72 per barrel, following solid gains earlier this week. Oil’s decline triggered across-the-board selling in commodities, with the Reuters/Jefferies CRB index down about 1.5 per cent. Gold has historically tracked oil prices, as it is often bought as a hedge against inflationary pressures sparked by higher crude. Looking forward, investors awaited possible market-moving news from a G8 finance ministers’ meeting in Lecce, Italy, over the weekend. Asset manager Fortis Investments told Reuters it favours gold as a longer-term play on both inflation and deflation. Gold is seen as an asset that holds its value in volatile times.
Gold and oil advance as weak-dollar theme continues.
12 June 2009 – Gold rose from a two-week low in New York and London on speculation that a slide in the dollar will spur demand for the precious metal as a currency alternative. The U.S. Dollar Index, which measures the currency against six others, including the euro and yen, fell as much as 1.4 percent. “Gold is now heading back up as the U.S. dollar is losing ground against the euro,” said Miguel Perez-Santalla, a sales vice president at Heraeus Precious Metals Management in New York. “Gold has reasons to rally,” said Stephen Platt, an Archer Financial Services Inc. commodity analyst in Chicago. “The dollar is pretty risky to be in.” The metal probably will trade at “$990 in a couple of weeks.” he said.
August gold rose $7.30 to settle at $962 on the Comex division of the New York Mercantile Exchange. Participants “can’t ignore the falling dollar anymore,” said Michael Gross, broker and futures analyst with OptionSellers.com. A weaker greenback tends to support dollar-denominated commodities by making them less expensive in other currencies, which can boost demand.
Over 75 analysts see $2,200/oz. average gold price ahead.
11 June 2009 – Gold prices touched $1,000/oz. in 2009 as stocks fell to decade lows and sent investors rushing to safe havens. The commodity super-cycle has swept gold prices up over threefold since 2001 — but that’s just the kickoff phase say the experts.
“$1,000/oz. gold signals the world is quickly losing confidence in paper currencies, the federal government and Wall Street,” says CEO Craig R. Smith.
How high will gold rush?
So far gold prices have systematically grown about $100/oz. per year between 2003 and 2008. Gold prices averaged $300 in ’03, $400 in ’04, $500 in ’05, $600 in ’06 and $700 in ’07 and $800 in ’08. But today many experts are forecasting $1,000-$1,500 gold prices in 2009 on their way north of $2,000/oz.
“Gold is poised for a dramatic surge and could blast through $2,000 an ounce by the end of 2009 as central banks flood the world’s monetary system with liquidity,” according to an internal client note from the US bank Citigroup.
“The damage caused by the financial excesses of the last quarter century was forcing the world’s authorities to take steps never tried before. This gamble was likely to end in one of two extreme ways: with either a resurgence of inflation; or a downward spiral into depression, civil disorder, and possibly wars. Both outcomes will cause a rush for gold,” reports London Telegraph.
“When greed is finally replaced by profound fear, ‘faith’ in fiat money will fail, and there will be a profound flight out of all paper and digital financial instruments, and into physical gold and silver. The reason we have not yet reached $2,000 gold is because this has not yet happened. When it does, $2,000 gold may well be the last legible signpost on a road that connects normalcy with financial chaos,” reports Paul Saur at Kitco.
South African gold output ‘to decline until year 2014.
10 June 2009 – A new study released today (June 9th) has suggested that gold production in South Africa will continue to decline until at least 2014, Mining Weekly reports.
The country was once the world’s largest producer of the yellow metal but slipped behind China in 2007 and is now third overall, having also been surpassed by the US.
It could only muster 220 tonnes of gold last year, a situation which was made worse by the impact of the power crisis suffered by state utility Eskom in January.
Now business research and consulting firm Frost & Sullivan has sounded a positive note for anyone with a Gold Investment by indicating that this trend is likely to continue.
Wonder Nyanjowa, a mining and metals analyst at the company, told the news provider: “The South African government’s renewed focus on mine safety, declining ore grades, electricity shortages, skills shortages, increased operating-cost pressures and a difficult labour environment will result in further production cuts.”
Such news is welcomed by those with an investment in the yellow metal as lower global supplies inevitably lead to a spike in demand and therefore higher Gold Prices.
A similarly positive, albeit broader outline for gold was offered last week by a group of analysts at leading North American financial services provider BMO Capital Markets.
“Gold, copper and oil should continue to be supported by better economic conditions, poor supply growth prospects over the long term and their appeal as a hedge,” they were quoted as saying by the Wall Street Journal.
Zimbabwe gold production slides by almost a half.
09 June 2009 – The Chamber of Mines has confirmed that gold production in Zimbabwe declined by 49 percent in 2008 as a result of the country’s difficult economic circumstances.
Official figures from the body show that output last year was 3,576 kg, in comparison to the figure of 7,017 kg reported in 2007.
David Murangari, president of the Chamber of Mines, explained that restrictive operating environments and a desperate lack of working capital contributed to the decline.
“The performance of the Zimbabwean mining industry in 2008 is best described as dismal and gloomy,” he said at the organisation’s annual general meeting.
“Most mines operated under extremely difficult macro-economic conditions for the first nine months of the year. Most importantly, there is dire need for recapitalisation of the industry.”
However, such falls in gold output are likely to be welcomed by anyone with a Gold Investment, as decreasing global supplies leads to higher demand and therefore higher Gold Prices.
Last week, Andrey Kryuchenkov, an analyst with London-based firm VTB Capital, also sounded a positive note for gold by explaining that dollar weakness and inflation fears should keep prices moving upwards.
“Most of the ongoing rally in the precious metal is more driven by a stark weakness in the US dollar than the risk averse buying we saw last winter,” he said in an interview with Bloomberg.
“Inflation concerns are gradually creeping onto the investor agenda.”
Stronger dollar weighs on gold futures.
05 June 2009 – Fund selling clipped gold futures Friday as stronger-than-expected payrolls data sapped their safe-haven allure and a muscular U.S. dollar pressured prices. The funds essentially were unwinding a “rash” of buying that came in recent sessions on dollar weakness, said Michael Gross, broker and futures analyst with OptionSellers.com. The funds were selling short, as well as liquidating some long positions, said George Gero, vice president with RBC Capital Markets Global Futures. “The payrolls data were not as bad as everybody expected,” he said. “That probably changed some portfolio managers’ minds about the time it would take the economy to recover.” Non-farm payrolls slid 345,000 in May, the U.S. Labor Department said Friday, well below the 525,000 decline economists had expected. “Down the road that will be inflationary, but that took some of the risk premium out of gold,” said Sterling Smith, vice president with FuturesOne. Last month’s payrolls drop was the smallest since September 2008, when the recession intensified in the wake of the collapse of Lehman Brothers.”
Gold futures for August delivery dropped $19.70, or 2 percent, to $962.60 on the New York Mercantile Exchange’s Comex division. The metal fell 1.8 percent this week. “We still think that gold prices are headed up toward $1,000 over the next one to two weeks, with support coming from inflows of investment and weakness in the dollar,” Tom Pawlicki, an analyst at MF Global in Chicago, said today. The dollar index, which fell to its lowest this year on June 2, has dropped 4 percent in the past month as gold futures gained 6.4 percent. “The dollar is the key driver at the moment,” David Barclay, a metals analyst at Standard Chartered Plc in London, said by phone today. “We’re not close to extreme inflation yet,” though “the dollar will be the main driver for gold for the rest of the year.” The dollar advanced the most against the euro since late March and rose to a three-week high versus the yen. “Gold is down on the back of a stronger dollar,” Anne-Laure Tremblay, an analyst at BNP Paribas, said. “Gold and precious metals as a class will do extremely well over the next couple of years,” Sean Darby, the chief Asia and emerging markets strategist at Nomura International Ltd., said today. “Debt forgiveness and debt restructuring will come secondary to the actual money printing by central banks.”
Dollar bounce yields cheaper gold.
03 June 2009 – Gold prices retreated Wednesday, falling 2 percent as the dollar rebounded against the euro and the British pound. The dollar’s gains came ahead of Thursday’s interest rate decisions from the European Central Bank and the Bank of England. Both are expected to keep their benchmark rates at historically low levels of 1 percent and 0.5 percent, respectively. While low interest rates can help energize an economy by making borrowing costs cheaper, they can also weaken a country’s currency. Stocks sold off sharply on Wednesday after data on factory orders and the services industry came in below expectations. Investors found little comfort in comments from Federal Reserve Chairman Ben Bernanke, who expressed concern over the country’s massive debt load. He told Congress that failing to ease the U.S. budget deficit could undermine efforts to restore the economy to health. Bernanke also played down the threat of inflation, saying the economy’s recovery is likely to be subdued, which should keep prices for goods and services in check. The dollar has taken a beating in recent weeks as optimism about the economy grows and investors flock to more risky assets like stocks. This has been a boon to gold, which is used as a hedge against inflation and a weak U.S. currency. Before Wednesday, the U.S. Dollar Index, which measures the dollar against a number of other major currencies, had fallen 12.1 percent since early March, when the stock market’s rally began. Conversely, gold was up 9.9 percent.
Gold and silver futures fell sharply Wednesday as the recent moves in a number of markets made an about-face, with the dollar strengthening and commodities as a whole selling off. Long liquidation and profit-taking were cited, with sell stops accelerating the moves lower. August gold, which overnight rose to $992.10 and appeared ready to re-challenge the closely watched $1,000 level, fell $18.80 to $965.60 an ounce on the Comex division of the New York Mercantile Exchange. “The dollar is really the key,” said Bill O’Neill, one of the principals with LOGIC Advisors. The dollar index had been sliding in recent weeks, underpinning gold. But all that changed Wednesday when the dollar index was up 1.069 points to 79.473 points shortly after the gold pit closed. “It’s a wholesale turnaround from what we’ve seen in the last week,” said a trader. “It’s probably profit-taking,” said the trader, but adding that some are also either shorting commodities or buying the dollar to take advantage of the short-term moves. The markets appear to have undergone a “consolidation day,” O’Neill said. “If there is significant follow-through tomorrow, then we’ll have to take a fresh look at it,” he said. “I suspect we could see a little more weakness in gold and silver and copper going forward, based on the fact they are in a little bit of a correction”.
The U.S. Dollar Index, a six-currency gauge of the greenback’s value, rose for the first time in a week as investors sought the currency’s refuge after equities fell. Gold typically moves in the opposite direction of the dollar index, which yesterday fell to the lowest since Dec. 18. “The market is certainly overdue for a downside correction,” Tom Pawlicki, an analyst at MF Global in Chicago, said today in a report. “Longer-term, we still see the market as being supported, with an advance above $1,000 an ounce possible over the next few weeks. Support will come from weakness in the dollar and from ongoing inflows of investment to commodities.” Gold “is being driven still by the dollar,” said Wolfgang Wrzesniok-Rossbach, the head of marketing and sales at Hanau, Germany-based Heraeus Metallhandels GmbH. “The dollar has gained back and that’s the reason why gold is off the highs. … Maybe there will be a little bit of consolidation” today, Wrzesniok-Rossbach said. “I don’t think we’ve seen the highs of the current rally” and gold will likely reach $1,000 “in a matter of days,” he said. Gold futures last topped $1,000 on Feb. 20. The metal still has gained 9.2 percent this year as governments around the world sell more bonds to combat the recession, weakening currencies and potentially sparking future inflation. “Gold has traditionally done well during periods of inflation and I believe we are entering a period of hyperinflation,” James Turk, the founder of GoldMoney.com, said today at a conference in London. “We are going to see clear signs of inflation by the end of the year. The Federal Reserve is trying to destroy the dollar to save the economy.”
Gold chops sideways consolidating recent rally
02 June 2009 – The COMEX August gold futures contract closed down 30 cents Monday at $980.00, trading between $974.10 and $990.20.
Gold futures ended near steady Monday as pressure from profit-taking overcame support from a weaker U.S. dollar. August gold fell 30 cents to settle at $980 an ounce on the Comex division of the New York Mercantile Exchange. The commodity is facing a band of resistance between $985 and $1,000, said Sterling Smith, vice president with FuturesOne. “We’re starting to see a little profit-taking here,” he said. Gold was consolidating above $970 but could begin moving higher in coming sessions, said Ralph Preston, senior market analyst with Heritage West Financial.
Gold prices were little changed Monday, despite a weaker dollar, as an improving economic outlook and a rally on Wall Street lured investors to more risky assets. On Monday, better-than-expected reports on manufacturing, construction and consumer spending provided more fodder for Wall Street’s three-month rally and sent stocks soaring. The day’s news renewed hopes that the recession will soon end and overshadowed General Motors Corp.’s filing for bankruptcy, which was expected. An increasing appetite for risk curbed demand for gold, which is considered a safe-haven asset. “Today you’ve seen money move into stocks,” said George Gero, vice president at RBC Capital Markets Global Futures in New York. “People are more willing to buy some risk than they were a week ago.” However, a weaker dollar continued to provide the precious metal with support. Investor sentiment on the economy has been growing more positive since early March as data suggests the recession is moderating and as the government floods the financial system with cash. On Monday, the dollar tumbled further against other major currencies. Investors use gold as a hedge against inflation, which can be sparked by a falling dollar.
Gold futures ended slightly lower Monday, but bullion remained within striking distance of $1,000 an ounce as currency weakness could still bolster the status of gold as a hedge against a falling U.S. dollar. Gold prices earlier reached their highest level since late February on the back of dollar weakness. Investors viewed gold as insurance against the falling value of their dollar-denominated portfolios. “Commodities generally are upbeat at the moment,” said Simon Weeks, director of precious metals at the Bank of Nova Scotia. “People are definitely buying hard assets as opposed to hard currencies.” Gold is an attractive investment for both bulls and bears on the economic outlook, he said. “I think the recent weakness of the dollar is driving the gold price right now,” said Caesar Bryan, who manages more than $450-million in assets at GAMCO Gold Fund in New York.
Plunging dollar propels gold higher.
29 May 2009 – Gold futures rallied Friday as speculative funds bought the metal while the U.S. dollar declined. “It’s almost a pure dollar play right now,” said Michael Gross, broker and futures analyst with OptionSellers.com. Funds were buying the metal and other commodities on continued dollar weakness and the potential for inflation, said Frank Lesh, broker and futures analyst with FuturePath Trading. “The funds are buyers; they’re buying commodities across the board,” he said. Stephen Platt, analyst with Archer Financial Services, added: “There’s movement of speculative money into commodities as a safe haven just like gold.” Historically, gold has tended to rise when the dollar falls as investors turn to the metal as an alternative currency, and vice-versa. Shortly after gold closed Friday, the ICE Futures U.S. dollar index was down more than 1.3%.
The dollar has weakened considerably since March as investors move out of cash holdings and into riskier assets like stocks on hopes for an economic recovery. Investors are also worried that the massive amounts of money the government has been pumping into the system could lead to inflation. That has been a boon for commodities like gold and oil. Oil prices continued their tear on the Nymex, rising above $66 a barrel for the first time in six months, as investors continued to bet on a rebound in demand. Prices are now nearly double the lows reached in March, when oil dropped below $35 a barrel. Other commodities, like grains, have been on an upswing too, benefiting from improving economic data and a brighter outlook on demand. “It seems like all the government spending and bailouts are finally starting to catch up and we’re seeing that spill over” into commodities markets, said Rob Kurzatkowski, futures analyst with OptionsXpress. “Commodities are definitely in vogue again.” Gold for August delivery jumped $17.10 to settle at $980.30 an ounce on the New York Mercantile Exchange. The precious metal shot up 10 percent in May, after two straight months of declines. Its year-to-date gain stands at 10.9 percent.
Silver futures gained 3% Friday, ending May with their biggest monthly gain in 22 years as inflation worries and hopes for an economic recovery boosted the metal. Gold rose to three-month highs as the dollar slipped. “What you may now be seeing is people think we are moving toward a recovery, and maybe we should be less pessimistic about the future of the metal, that may be factoring in the prices,” said Jeffery Christian, managing director of New York-based precious metals consultancy CPM Group. Silver, whose biggest single industrial use is in photography, is also used in medical applications and solar-energy devices. CPM’s Christian also pointed out that silver had declined sharply in the second half of last year, when the global economy was entering into a sharp downturn. Its prices had fallen more than the price of gold. “Silver is playing catch-up to some extent,” said Christian. The silver investment market is traditionally more volatile than gold, because the market is smaller than the gold market. “The gold market is more participated, involved more money, and more liquid, and it tends to see lower volatility,” said Christian. “In silver, you have few people with less money. It’s a much more illiquid market and prices are always more volatile than gold.”
Gold tops $960 fueled by weakening dollar
29 May 2009 – Gold rose, closing in New York at the highest price in three months, as a slumping dollar spurred demand for precious metals as a store of value. The dollar has dropped 4.8 percent this month against a basket of six major currencies, while gold has jumped 8.1 percent. The greenback fell as US equities and commodities climbed amid demand for higher-yielding assets. The slumping dollar “will only make gold more attractive if investors fear inflation,” John Reade, UBS AG’s head metals strategist in London, said in a report. Gold futures for August delivery gained $8 to $963.20 on the Comex division of the New York Mercantile Exchange, the highest settlement since February 25. Earlier, the metal reached $966.70, the highest intraday price in two months. Gold has gained 8.9 percent this year.
Gold prices have been rising steadily in recent weeks amid a falling dollar. Investors fear that the U.S. currency will continue to lose value as the government pumps more than $1.2 trillion into the financial system to energize the economy. This could lead to inflation down the road. “We think it’s going to be difficult for the Fed to sterilize all that money in the system and take it out of the system and that is going to be quite bullish for gold,” said Brian Hicks, co-manager of the global resources fund at U.S. Global Investors in San Antonio, Texas. “We’ll retest the $1,000 mark and more than likely breach that level in the near term.” Meanwhile, oil prices closed above $65 a barrel on the Nymex for the first time in six months as OPEC kept current production levels in place as expected. The Organization of Petroleum Exporting Countries has been slashing production this year to offset a drop in demand. In recent weeks, there have been signs that the cuts may be working. On Thursday, the government reported an unexpected drop in U.S. oil supplies last week, marking the third straight week that supplies have declined.
Fund buying boosted gold futures Thursday as rising oil prices and gains in the euro also supported the metal. “It looks like the funds are coming back to the market in a big way,” said Michael Gross, broker and futures analyst with OptionSellers.com. “Nobody wants to miss getting in at the beginning of a bull market.” A rally in the euro and crude, as well as technical trading, also boosted gold, said George Gero, vice president with RBC Capital Markets Global Futures. Technical traders started bidding gold up as it held above $945, said Pat Donnelly, senior broker with Peak Trading Group. With a close above $965 in the coming days, “we could be off to the races,” he said, adding that there isn’t resistance between that level and $1,000. The close above $960 paves the way for a test of record highs above $1,000 in the coming 14 trading days, said Ralph Preston, senior market analyst with Heritage West Financial.
100kg of gold, silver smuggled from Indian airport
25 May 2009 MUMBAI: A daring case of smuggling of a large quantity of gold and silver hit the Mumbai International Airport, India’s largest airport on Monday.
Airport officials three robbers decamped with about 100 kilograms of gold and silver from the Indian Airlines cargo terminal at Mumbai’s domestic airport.
Officials suspect the robbers had prior information about the cargo containing gold and silver bars.
Confirming the development, Manish Kalghati, General Manager, Corporate Communications & PR of GVK Infrastructure, said: “Yes, the theft took place around 11 am at the Indian Airlines cargo section.”
Kalghati, however, refused to provide confirmation on the quantity of gold and silver stolen. Officials said the robbers assaulted one of the guards who tried to raise an alarm.
What has surprised many is the manner in which the robbers entered the heavily guarded airport and carried out the heist. The domestic airport has been undergoing major renovation work. Meanwhile, a meeting has been called by the Indian Airlines and Air India officials to probe into the security breach.
Smuggling of gold has been a major issue in India’s bullion market. Last month, gold coins and silver bars were smuggled from a Hindu temple in southern India’s Kerala state.
Gold enjoys 4th-straight gain, ends week up 3%
Gold extends safe-haven rally to $950.
Gold prices climb as dollar weak today.
Gold prices climbed on Tuesday as the dollar declined, hiking demand for bullion as an investment option after data showed housing starts and building permits dropped to record lows in April. “This morning report of a 12.8% decline in housing starts in April versus the prior month continues to suggest the bottom in housing still hasn’t been reached,” said Fred Dickson, chief market strategist, Davidson Companies. “Although the credit picture is improving and the job loss rate appears to be showing signs of slowing, housing remains the weak link in the economic picture. We continue to believe that an economic recovery probably won’t begin until the fourth quarter at the earliest,”
The U.S. Dollar Index, a basket of six major currencies including the euro and yen, has dropped 3.2 percent this month, enhancing the appeal of gold as an alternative investment. The index fell as much as 0.9 percent today. The dollar weakened against the euro after Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley sought to repay $45 billion in government bailout cash, according to people familiar with the matter. The banks need approval for the payments from the Federal Reserve. Gold futures for June delivery rose $5 to $926.70 on the New York Mercantile Exchange’s Comex division. The price has gained 4.8 percent this year. “It is growing concerns about the weaker dollar in future, given the increasing likelihood of an inflationary period to come, that is really driving gold higher,” said Patrick Chidley, an analyst at Barnard Jacobs Mellet USA LLC. “The time has arrived when more and more people are clamoring for inflation to make a real comeback,” Jon Nadler, a senior analyst at Kitco Inc. in Montreal, said today in a report. “Gold — of course I’m buying it,” said David Roche, the president of Independent Strategy, in a Bloomberg Television interview. He said the Standard & Poor’s 500 Index of equities may tumble as much as 30 percent in coming months.
Much of gold’s focus in recent sessions was reacting to moves either up or down in the stock market. In recent weeks, strength in equities had tended to cap gold’s upside due to reduced safe-haven demand, explained Carlos Sanchez, precious-metals analyst with CPM Group. But with equities mostly stable Tuesday, the market returned its attention to the dollar, said Charles Nedoss, senior account manager and metals analyst with Peak Trading Group. “For the first time in a while, you’re seeing gold take a look at a weaker dollar,”
“Gold still seems to be caught amidst heightened risk aversion and rising optimism in the global equity markets,” said Richcomm Global Services senior analyst Pradeep Unni. A better appetite for stocks is diverting some investment for bullion, analysts said. U.S. stocks turned positive on Tuesday after earlier losses. Weakness in the dollar, which is being dragged lower by renewed optimism over the global economy, is supporting gold, however. The precious metal is often bought as an alternative investment to the U.S. currency. Some investors have plugged into gold to hedge equally against potential for the positive mood to sour and inflationary problems posed by quantitative easing. “Broadly what we’ve seen is an increase in non-commercial long positions from tactical investors and broader currency related movements,” said Barclays Capital analyst Suki Cooper.
Gold dips; profit taking and sell stops cited
Gold edges higher as stocks slide
Gold futures settled marginally higher on some safe-haven buying as equities declined. Follow-up buying from Tuesday’s gains helped the metal, said Pat Donnelly, senior broker at Peak Trading Group. June gold rose $2 to settle at $925.90 on the Comex division of the New York Mercantile Exchange. “More new fund investors [are] driven by currency volatility and stock market volatility,” said George Gero, vice president with RBC Capital Markets Global Futures. The increased fund buying as well as rising moving averages, open interest and volume are likely to increase volatility in the metal, he said. Lower equities pressured silver despite gold’s rise because of silver’s industrial demand, said Sterling Smith, vice president with FuturesOne. Silver is more widely used for industrial applications than is gold. Comex July silver dropped 19.5 cents to settle at $14.02 an ounce. Meanwhile, platinum-group metals declined as participants booked profits in quiet trading. “It’s really quiet out there,” a trader of these metals said.