-- Posted Thursday, 11 August 2005 | Digg This Article

Market Analysis from CapitalUpdates.com:

Retail Sales came in below expectations, whether you include the rash of recent auto sales or not.  Retail Sales for July came in below the expected 2.0% at 1.8%.  When excluding auto sales, they came in below the expected 0.6% at 0.3%.

Initial Jobless Claims for 8/06 came in less than the expected 315,000 at 308,000.

Business Inventories for June also came in below expectations, remaining unchanged versus an expected 0.1% rise.  “Sales rose 0.7 percent in June after an unchanged reading in May, the Commerce Department said.  The strong sales performance pushed the inventories-to-sales ratio - a measure of the number of months it would take to deplete stocks at the current sales pace - to a record low 1.29.  Financial markets had looked for a 0.1 percent rise in business inventories, the same as in May. The unchanged inventory reading was the weakest since a 0.1 percent decline in stocks in September 2004, a Commerce aide said.”

Tomorrow at 8:30AM EST brings Export and Import Prices for July, as well as the Trade Balance for June expected at -$57.2 billion.  At 9:45 is the preliminary reading for August Michigan Sentiment expected at 96.5.

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After a muted start, oil scaled new record highs and traded as high as $66.00 in late morning action, a new record intraday high, before falling back off slightly and ending with a gain of $0.90 to $65.80, a new record closing high.  Concerns over gasoline supplies and inventories in general, more problems at refineries, IEA demand forecasts, geopolitical concerns, and worries over brewing tropical storms are all reasons for the current surge in oil prices.

Treasuries started off the day higher after disappointing Retail Sales and extended their gains as demand from international investors was seen as rising at the 10-year note auction today.  “Foreign central banks and investors that bid through so- called primary dealers bought 46.9 percent of the $13 billion of 10-year notes sold, the most since June 2003.”

The Dow, Nasdaq, and S&P are traded nicely higher this morning before dropping off to find just marginal gains midday as oil climbed to new record highs, but all three indices rallied in late trade to end near their highs of the day.

Among the big names making news in the market today were Worldcom, Elizabeth Arden, Target, Yahoo and Alibaba, Pfizer, Bayer, Hannover Re, and Deutsche Telekom.  

The U.S. dollar index continues to fall from its July highs, today trading lower overnight and then extending its losses following the release of poor Retail Sales to end at new 2 month lows.  The euro index found new 2 month highs above 124 and the yen found new 6 week highs above 91 before it fell off slightly.

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

Gold and silver traded nicely higher starting in New York Access trade late yesterday, held their gains in Asia and London, and extended their gains in New York trade today.  Gold climbed to as high as $447.20, the highest since December 7^th, 2004, and came within just $8.50 of the 16 year closing high of $455.70 hit last December 3^rd, 2004.  Gold closed higher by $8.70 to $444.80, a 5 month high (gold closed at $445.50 on March 11^th otherwise it would be an 8 month high), and silver gained $0.10 to $7.14.

The Gold/Oil ratio continues to trade at near 20 year lows at around 7.  Gold still has a lot of catching up to do if the ratio is going to return to its historical average around 15, especially if oil continues its move higher.

Copper climbed back near all-time highs, gaining $0.019 to $1.706 and hitting a high of $1.707.  Platinum climbed to its highest since April 2004 as it gained $12 to $918.  The CRB index gained 2.65 points to 322.59, closing at a new 24 year high.  The intraday high of 323.33 hit last March 16^th was not eclipsed as the index hit a high of just 322.79 today.

Gold and silver equities started off nicely higher and added to their gains throughout the day to scale new 4 and ½ month highs with over 4.0% gains.

More Precious Metals Analysis:

“December gold surged higher on the back of aggressive fund buying pushing through several key resistance levels including 445 and 451. The sharply weaker Dollar and subsequent upside break out in the Euro started a chain reaction which drove metals up across the board. Surging energy prices and Iran still refusing to abandon their nuclear program added to gold's appeal. News that South African mine workers have struck a deal to end their strike seemed to have virtually no impact on the precious metals including platinum which rose sharply along with the rest of the complex.” - The Hightower Report, Futures Analysis and Forecasting

More analysis first released in an intraday update this morning:

Some bullish gold notes from Julian Phillips:

• With Belgium selling 30 tonnes of gold in July / August, there remains just 3 tonnes left before the CBGA's 'ceiling' of 500 tonnes is reached, the implications for the gold market are significant for the next 45 days.
• The Chinese Central Bank has issued the contents of the basket of currencies. It is confirmation of the move away from the U.S. $ as the sole global currency.
• The Indian Gold Market looks to be caught short right now and could be set to panic into the market.

These are not just incidental market features, but both immediate and significant pieces of news for the gold market. "Global Watch - The Gold Forecaster" features these stories in this week's issue and ties them into the Technical picture to make them useful to you.

Gold comments from Peter Spina:

This morning’s gold move is very bullish short-term, as we have broken though more key resistances, now above the $440-441 mark.  A close above this area would indicate a test of $445-450, if not prior highs of $456 seen last December.

The bullish scenario for gold continues to build, as record oil prices breach the $65 a barrel mark, sending the gold-oil ratio to records lows, touching 6.7 yesterday.  Gold remains quite undervalued when using many measures and as cost of production continues to soar, only a higher gold price can justify economic mining of gold, already in short supply.

 

The long-term HUI chart indicates a strong breakout with positive momentum firmly in control.  First resistance now to observe is 218-220, followed by 238-240.  A break of 258.60 could ignite the next major leg of this bull market higher, but with crumbling valuations, there is growing concern of fundamentals in this marketplace.  We would advise all investors to focus on earnings and review their positions carefully. 

 

More in-depth analysis in this weekly issue of the Gold Forecaster out tomorrow.

 

Gold & Silver Stock News Update from GoldReview.com:

 

A possible end to the South African miner strike, AngloGold Ashanti’s and Placer Dome’s welcome ends to strikes at their mines, Golden Star’s new gold mineralization in the Saramacca area, AngloGold’s sale of a Peruvian gold mine for $12.5 million with the option to buy back, Bema Gold’s, Cumberland’s, Metallica’s, Queenstake’s, and Desert Sun’s 2^nd quarter results and updates, Silver Wheaton’s acquired shares of Beer Creek Mining, Polimetall’s possible western IPO, and Western Silver’s phase 13 drill results were among the big stories in the gold and silver mining industry making headlines today.

 

WINNERS

1.      DRDGOLD	DROOY +18.68% $1.08
2.      Eldorado Gold	EGO +10.07% $3.17
3.  Orezone	OZN +9.21% $1.66

 

LOSERS

1.       Rio Narcea	RNO -2.96% $1.64
2.       Cambior	CBJ -2.33% $2.10
3.  KIRKLAND	KGI.TO -2.15% $4.10

         

Note:  Winners & Losers Will No Longer Track Stocks Under $1.

 

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Do you have questions, comments, or suggestions about this report?  Email Chris Mullen at cm@goldseek.com.

         

- Written by Chris Mullen

 

 

The Gold Seeker Closing Report is a free edition providing a daily wrap-up of gold & gold-related news.  For more in-depth analysis of the gold markets, subscribe to The Gold Forecaster.

 

All sources are given within the report and most articles can be found as they are released at http://www.capitalupdates.com/, http://www.goldseek.com/, http://www.silverseek.com/, and http://www.goldreview.com/.

 

© Gold Seeker 2005

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-- Posted Thursday, 11 August 2005 | Digg This Article

Previous Articles by Chris Mullen, Julian Phillips, & Peter Spina, Gold Seeker

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