-- Posted Thursday, 23 June 2005 | Digg This Article

Market Analysis from CapitalUpdates.com:

Initial Jobless Claims for 6/18 came in less than the expected 330,000 at 314,000, a 2 month low.

Existing Home Sales for May fell 0.7% and came in less than the expected 7.15 million at 7.13 million, though the mark is still the second highest on record, just under last month’s record mark of 7.18 million.

Fed chairman Greenspan and treasury secretary Snow spoke with the senate finance committee today about relations with China.  While both Snow and Greenspan support the idea that China needs to reform their currency and move toward removing the current peg they have to the dollar, both oppose legislative action such as tariffs in order to motivate them to do so.  Greenspan noted that should China remove their peg to the dollar, there is “no credible evidence” that it would create jobs in the US or help our economy in other ways.  Both Greenspan and Snow were grilled pretty harshly by several senators about the lack of action in recent years to combat a variety of alleged injustices by the Chinese.  The overall feeling from the senate hearing was that Snow and Greenspan did little to ease the senators concerns, and it seems increasingly possible that they may very well go ahead with legislative action and try to impose tariffs on China in an attempt to influence them to remove their currency peg to the dollar.  CNOOC’s bid for Unocal, theft of intellectual property, and distinctions between free and fair trade were among the main issues discussed during the hearing surrounding the overall revaluation issue.

Tomorrow at 8:30AM EST brings Durable Goods Orders for May expected at 1.5%.  At 10AM are New Home Sales for May expected at 1,320,000.

Oil gained $1.33 or 2.29% to $59.42 and reached as high as $60 at one point as worries over strong global demand coupled with worries over supplies and forced prices higher.

The 10-Year Treasury note yield traded slightly higher the entire day, gaining 0.014 points to 3.959% as the September 2005 US Treasury bond lost 3/32 to 118 9/32.

The Dow, Nasdaq, and S&P took different paths this morning, but all three indices fell off together around 1:30PM EST and ended the day with significant losses.  After trading in pretty tight ranges with low volume and low volatility for the past month or so, many were expecting a big move soon, but most were not sure whether that move would be to the upside or to the downside.  Investors got their answer today, with the major indices ending the day with over 1% losses on high volume.  Possible reasons for today’s decline include higher interest rates, record high oil, and concerns over protectionist fears raised by the Greenspan/Snow senate hearing.

Among the big names making news in the market today were Morgan Stanley and Parmalat, Toys R Us, Chevron, Unocal and CNOOC, Callaway Golf, Rite Aid, GE, Delphi, and FedEx.

The euro index made new 9 month lows as Italian Consumer Confidence fell to a 9 month low.  The euro also fell to one year lows against the yen as the issue of Chinese revaluation heated up during the senate finance committee hearing today.

Gold & Silver Report from GoldSeek.com & SilverSeek.com: 

Gold made new 3 month highs today despite a stronger dollar.  Higher oil and strong world demand are just a couple of reasons why gold has rallied in just about every world currency recently.  Gold traded mixed in Asia and slightly lower in London before climbing to new highs in New York and retaining most of its gains into the close, ending the session higher by $3.20 to $440.80.  Silver followed a similar pattern to that of gold, but remained in a tighter range and ended today’s session with a gain of $0.01 to $7.24.

Gold and silver equities traded about 2% higher in morning trade, but steadily fell off in afternoon trade as the Dow, Nasdaq, and S&P dropped.

More Precious Metals Analysis:

"August gold closed above $442 with an emphasis.  Today’s close set a 10 week high on Thursday.  It took four days to break through $440 but in doing so also broke above a second psychological resistance level.  There is probably not much between here and $450.  We may see bears regroup with heavy selling pressure at those highs.  Heavy profit taking will likely limit the advance, but a larger rally could be brewing.

Word on the Street has been speculation on whether the break in gold’s inverse relationship to the dollar has been broken.  Clearly in the short term it’s been bent pretty hard, but has it been snapped? That remains to be seen.  A gold rally past $460 certainly might just confirm such feelings.  However, short term analysis can easily blot out the full extent of what’s in play.  Are gold bugs really not looking at the dollar?  Or has a long term analysis been brought back into the market place?

The dollar rallied over 50 points today to close above 89.00, and appears primed to test last weeks high of 89.22.  One might ask where is this strength in the dollar coming from?  Would be hard to point toward crude as prices appear to test its own highs!  But yes, you’ve heard the talk as well, the euro certainly has been garnering plenty of news lately.  But it’s no longer being hailed the alternative to the dollar.  Not that there’s serious talk about countries pulling out of the euro, but when calls are made for, say the lira to be re-instated, it smacks of a lack in confidence. 

For the past couple of years, to hedge against the dollar, the assumption was to buy the euro.  But that is shaky ground right now.  So where to put your money then? In another currency? Remember that the dollar’s long term outlook can make the rosiest economist sweat.  Perhaps Asian currencies?  But right before a possible Chinese yuan revaluation?  The answer might just be gold.  Gold has provided plenty of physical comfort to worried traders.  But should this relationship be found just between the dollar and gold?  Gold is a global commodity!  If the euro and the dollar begin to find parity once again, the concern is that neither currency provides a stable long term outlook.  That leaves gold in a mighty fine position.

Traders will have plenty to look forward to this week.   However, next Wednesday will be the dozy.  First quarter final GDP numbers come out, the Fed meets, talking interest rates and various aspects of the US economy, and to top it off, energy stocks data.  Profits may want to be protected near term and have contingency plans for movement in the market, in either direction." - Thomas Hartmann, Altavest Worldwide Trading

“The gold market mounted an impressive recovery bounce off early weakness and did so in the face of strength in the Dollar. European gold managed a three month high on the session as specs and trade players were noted buyers. With the August gold climbing above a series of critical chart points we would not be surprised to see even more fund buying come into play in the sessions ahead. We also think that increased concern toward the Euro is providing some long interest to gold as some players fear problems in the US and Euro zone and are looking for a safe haven.” - The Hightower Report, Futures Analysis and Forecasting

Gold & Silver Stock News Update from GoldReview.com:

A merger between Romarco, Western Goldfields and U.S. Gold, Cardero’s test results for their iron sand project, Desert Sun’s conference call update and drilling results at the Canavieiras Mine target in the Jacobina Mine area, Western Silver’s appointment of a project development manager and the addition of a new member to the Company's Board of Directors, and ECU Silver’s operating results from operations at the Velardena property were among the big stories in the gold and silver mining industry making headlines today.

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- Written by Chris Mullen

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-- Posted Thursday, 23 June 2005 | Digg This Article

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