-- Posted Thursday, 21 June 2007 | Digg This Article
from Adrian Ash
BullionVault
07:15 EST, Thurs 21 June
SPOT GOLD PRICES traded flat during the first-half of London trade on Thursday, holding above Wednesday's late low of $653.50 hit in New York, but failing to break above $656.
The AM Fix came in at $654.50 per ounce, the lowest Fix since Friday afternoon.
"The focus today will remain on bond yields as well as the US Dollar," reckons Peter Fertig at Dresdner Kleinwort in Frankfurt.
"The economic data due for release are likely to be more supportive for the US Dollar," he adds – pointing to the Initial Jobless Claims, Leading Indicators and Philly Fed manufacturing index due at 08:30, 10:00 and 12:00 EST respectively.
"That would be negative for gold."
US Treasury prices also dipped Thursday morning, pushing the yield on 10-year notes above 5.15%. Short-dated bonds have outperformed mid-dated Treasuries this week so far, Bloomberg notes.
But even with the US bond market expecting a higher price of money ahead, investors in Asia turned positive on gold overnight, says Bernard Sin, chief gold trader at MKS Finance in Geneva.
Wednesday's 1% drop in the spot gold price brought out buyers in India and Vietnam, he told Reuters earlier.
"Buyers in Vietnam are more concerned about their currency," said Sin. "The lower the gold price goes, the more they buy" – as a hedge against inflation and a store of value.
Overnight in Tokyo gold futures for delivery in April '08 dropped 0.6% to the equivalent of $660.87 per ounce.
Gold priced in Pounds Sterling also slipped in London this morning, failing to hold above £329 per ounce by lunchtime.
Versus the Euro gold prices traded just north of €488 per ounce, little changed from this time last week.
In the gold mining sector meantime, the South African Chamber of Mines responding to wage negotiations with the local mine workers' unions by calling their demands "mind-boggling".
Elize Strydom, the chamber's industrial relations advisor, noted that the National Union of Mineworkers has tabled 60 demands over and above asking for a 15% wage increase.
"We have declared a dispute with the Chamber," said NUM spokesman Lesiba Seshoka. "When we met [Weds] it wasn’t a negotiating session but a complaining session. The Chamber put nothing on the table."
The NUM counts 160,000 workers from South Africa's gold and coal mining industries as its members. South Africa remains the world's largest supplier of new gold-mine supply, according to the latest Yellow Book from Virtual Metals. But production has more than halved over the last decade due to worsening ore grades and rising production costs.
The current threat of strike action could hamper gold-mining production by AngloGold Ashanti, Gold Fields and Harmony amongst others. Strike action two years ago closed South African gold mining production for 5 days.
Adrian Ash
BullionVault
Gold prices live | Gold price chart, no delay | Latest gold market news
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
-- Posted Thursday, 21 June 2007 | Digg This Article
