-- Posted Friday, 5 October 2007 | Digg This Article
London Gold Market Report
from Adrian Ash
BullionVault
07:55 EST, Fri 5 Oct.
SPOT GOLD PRICES held inside their narrowest range for three weeks early Friday, recording an AM Fix in London more than $10 per ounce above Thursday afternoon's level.
But while currency, gold and equity traders awaited US employment figures for Sept. at 08:30 EST, the Gold Market still lagged last Friday's 27-year record close by more than 1%.
"This [housing data] promises to shift the precious metal basket from its current range," reckons Walter de Wet at Standard Bank in Johannesburg.
"In the past few months, this [US employment] data has been one of the leading market movers."
The continuing rescue of trapped workers at the Elandsrand mine in South Africa, meantime, made headlines in the European press this morning. But the six-week shutdown ordered by the Johannesburg government will cut the mine's output by just two tonnes according to Harmony Gold, the mine's owners.
That's less than 10% of the firm's total output for that period, and below 0.1% of annual world gold mining supply.
In London today, ABN Amro the Dutch investment bank followed Citigroup and Deutsche Bank in upgrading its forecasts for the Gold Price, alongside copper, coal and iron ore. The price of lead surged to a new record high at the London Metal Exchange, while copper prices continued to rise for the fourth week running following a mine-strike in Peru.
Global wheat prices, in contrast held flat on the futures market, heading for their first weekly decline since July. They had more than doubled since April on poor harvests in Europe and Australia. Domestic prices in South Africa, the continent's third-biggest wheat producer, fell as the Rand rose on the currency markets towards a new 12-month highs versus the US Dollar.
The Euro traded sideways above $1.4100, while the British Pound held below $2.0390. That capped the Gold Price in Sterling at £361.50 by midday in London.
For Eurozone investors looking to Buy Gold Today, the price gave back just 1 from Thursday's spike to trade at 521.50 per ounce.
At the Tocom exchange in Tokyo, gold futures for delivery in Aug. '08 had earlier ended the session 1.2% higher, equal to $742.67 per ounce. Platinum futures rose for the third day running, despite Mazda the Japanese auto giant announcing on Monday that it has developed a catalyst for cars that could cut platinum use by up to 90%.
Catalysts remain the No.1 use of all platinum-group metals, according to a June report from the CPM consultancy. Auto-industry demand for platinum doubled in the 10 years to 2006 to reach 125 tonnes. Jewelry demand, meantime, slipped by more than 7% last year to only 19 tonnes.
Back in today's markets, crude oil traded sideways after a surprise increase in US stockpiles knocked it back from all-time highs above $83 per barrel on Wednesday.
"Prices usually collapse around the end of October, start of November," according to Johannes Benigni at PVM Oil Associates in Vienna. "There's been no fundamental reason driving prices higher. It's been higher because of funds jumping into it. I see more downside potential."
On the economic front, meantime, UK finance minister Alistair Darling is now expected to cut his growth forecast for 2008 from 3.0% to 2.5% after telling the Financial Times that "there will undoubtedly be an effect" on the British economy from the ongoing turmoil in world credit markets.
Darling said that the Federal Reserve's 0.5% cut in Dollar interest rates would help "counterbalance" the impact on the United States, but he refused to comment on the Bank of England's decision to keep British interest rates on hold on Thursday.
Today saw the start of a 6-day strike over wages by workers in the government-owned Royal Mail postal service, while a new report said this morning that the average British home now costs a record multiple of the average first-time buyer's income twice what it was 10 years ago at five times salary.
As a percentage of income, monthly mortgage costs have also doubled since 1997 to reach more than 32% on average.
"The standard of living of most people in the West is not going to get better relative to mean growth over the course of the last 20 years," said Philip Manduca, managing partner of the $500-million Titanium Capital fund in London, to a Bloomberg News anchor in an interview on Thursday.
"So there are going to be lots of calls for monetary ease and wage improvements. [But] the problem here is you just haven't got the growth, you haven't got the margins, you haven't got the profits going to bottom lines to create wage improvements and bonuses."
What to do? "Gold's going higher, you can count on that," reckons Manduca.
"It's still cheap, in fact, relative both to its fundamentals and its historical price in real terms."
Adrian Ash
BullionVault
Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
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 Friday, 5 October 2007 | Digg This Article
