Gold Spot gold was trading at $664.00/664.50 an ounce as of 1215 GMT.
Gold has traded sideways in Asia and early European trading after yesterday's move up which may have been due to dollar weakness. Gold broke out of the recent tight trading range between $653 and $660. Next resistance is seen at $666 and then $675.
Besides yesterday's news regarding record jewellery demand in India and internationally and record bullion demand and holding in the Streettracks Gold ETF (the world's largest ETF) there is also positive gold news in the form of record gold dehedging which hit a new high. In the second quarter of 2007, 5.2 million ounces (161 tonnes) were removed from gold producers' hedge books compared with the first quarter, a quarterly study by precious metals consultant GFMS Ltd. on behalf of Societe Generale. Gold mining companies continuing to reduce gold hedges is a sign that they wish to take advantage of rising bullion prices. Gold hedging has been very negative for the gold mining industry and for the gold price in recent years helping as it did to surpress the gold price.
Just this week, Newcrest Mining Ltd, Australia's largest independent gold producer, suffered a 45 per cent fall in annual profit to $72m, with charges relating to a hedge book restructuring costing $122.5m. Newcrest last year deferred the sale of 1.6 million ounces of gold into set-price contracts to give more exposure to the soaring spot price. But its hedge book remains a huge $1.17 billion out of the money.
Gold hedging is one of the risks (along with accounting, auditting, management, trade union, environmental and political risk) which can negatively affect gold mining companies and their share prices. Conversely, many of these same factors can positively affect the gold price. This is because any decline in supply is bullish for the gold price. Therefore, some of these risks while bearish for gold mining shares are bullish for the gold price and gold bullion itself.
Silver Spot silver is trading at $11.84/11.86 an ounce (1215 GMT). While technically silver is now very damaged, the fundamentals on silver are as strong as ever and this will likely be seen as one more volatile sell off in a multi year secular bull market.
PGMs Platinum was trading at $1248/1254 (1215 GMT). Spot palladium was trading at $328/332 an ounce (1215 GMT).
Currencies, the USD and Gold The euro and the pound continued to edge higher against the US dollar Thursday as sentiment remained mixed that a worldwide credit crunch could still trigger an interest rate rise in the euro zone while holding rates steady in England. The Euro bought US$1.3587 in morning European trading, up from the US$1.3536 it bought in New York late Wednesday after the European Central Bank, in an unusual step, reiterated its stance that it was maintaining "strong vigilance" toward inflation and economic developments.
Oil Oil rose, reversing the losses it suffered yesterday after the US Department of Energy reported an unexpected rise in crude inventories, as supply fears linked to Hurricane Dean's impact on Mexican production reasserted themselves. At 9.59 am, London's benchmark Brent crude contracts for October delivery were up 25 cents at 68.95 USD per barrel. Meanwhile New York crude contracts for October delivery were down 3 cents at 69.23 USD per barrel.
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