-- Posted Monday, 18 June 2007 | Digg This Article
from Adrian Ash
BullionVault
14:01 ET, Mon 18 June
THE SPOT GOLD MARKET rose in the Asian and early European sessions on Monday, gaining nearly $3 from Friday's US close to open the week in New York above $658.75 per ounce.
That 0.5% move versus the Dollar was outstripped by gold priced in Yen as the Japanese currency dropped to ¥123.42 per Dollar, a fresh four-and-a-half year low.
The Yen's latest drop came after Bank of Japan governor Toshihiko Fukui said he wants to see greater traction in the domestic Japanese economy before raising interest rates. Short-term borrowing costs in Japan have now been set at 0.5% or below for nearly 12 years.
Spot gold priced in Euros also rose, touching €492 before dipping towards the US open and recording an AM Fix in London at €490.79 per ounce.
Versus the British Pound, however, gold hardly moved, holding around £332 per ounce as the Pound broke a 10-day high versus the Dollar above $1.9800.
In Asia today, "I don't see aggressive gold buying from the physical side," said Ronald Leung of Lee Cheong Gold Dealers in Hong Kong to Reuters earlier.
"My view is that gold is probably going to be trading in a fairly broad range in the near term," reckoned David Moore at Commonwealth Bank in Sydney. He put gold between $645 and $670 per ounce from here.
Standard Bank's daily report notes that "gold has shown some resilience in its recent trading in the $640s and would likely continue to find support in front of its 200-day moving average, starting from the $643 level.
"[But] upside potential in the gold market would likely be capped at $661 in the interim."
As for the much-vaunted $700 level – a 'key' barrier according to many pundits during gold's 14% rally in early spring this year – "the time window has shifted," says Peter Spina at GoldSeek.com. "I would not feel comfortable betting against gold at these levels, although it does appear the rally will take a summer vacation."
Speculators in the Tokyo gold futures market disagreed on Monday, pushing the benchmark April '08 contract 1.4% higher to a 10-session high as the Nikkei stock index rose 0.9%.
But Comex gold futures saw a drop of 30% in the total number of long bullish positions in the week ending June 12, the latest data available. Open interest grew by 7% meantime, and large commercial traders – the "smart money" of refiners and other gold-industry players – cut their net short positions by more than a quarter from the week before.
This group now holds a smaller net short position in gold futures than it did back in January, report ResourceInvestor.com.
With the "smart money" cutting its bearish opinion in the gold market, "the heavy pace of large commercial net-short reduction keeps this indicator on the bullish side," it adds.
Adrian Ash
BullionVault
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City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at BullionVault – where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.
(c) BullionVault 2007
Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.
-- Posted Monday, 18 June 2007 | Digg This Article
