Friday, July 30, 2010

Gold Sneaks Above $1,170

Last night, gold stayed between $1,166 and $1,168 as little gold-related news was disseminated. Climbing above $1,168 a little before 11:30 PM ET, the metal then fluctuated between that level and $1,170 before sneaking up above the latter level around 6 AM. As of 8:05, the spot price was $1,171.40 for a gain of $4.90 on the day. The Kitco Gold Index attributed +$6.20 to predominant buying and -$1.30 to a strengthening greenback.

The U.S. Dollar Index, after drifting last night, briefly descended below 81.5 before undergoing a rally. Starting at just after 3:00, the rally took the Index almost all the way up to 82 befoe it ran out of steam around 6:30. Afterwards, the Index fell back part way; as of 8:11, it was at 81.72.

A Wall Street Journal report says gold continues to stabilize as physical demand kicks in.
"Quite simply, investors are seeking risk and for now gold's safe haven properties have been made redundant," said UBS analyst Edel Tully in a daily report....

Analysts said physical demand has helped put a floor in gold prices this week around $1,160, safely above the 200-day moving average of $1,149.50.

Each time gold dipped below $1,160 this week, it didn't get far before it bounced back, said Rory McVeigh, a precious metals trader at Commerbank in Luxembourg.
The article also mentions holdings of the SPDR Gold Shares Trust stayed steady yesterday.

An earlier Reuters report also ascribes gold's stabilization to physical buying.
"The market is very hot. There's plenty of physical demand and I can't meet the orders. It's from India, Indonesia and Thailand," said a physical dealer in Singapore. "Basically we are seeing buying from jewellers and investors from the Far
East."...

"On a longer-term basis, it will fuel demand for gold if your economic recoveries have stalled. Equities might not perform so well," said Ong Yi Ling, investment analyst at Phillip Futures in Singapore.

"For today, I don't see it going up above $1,175 for the upside. On the downside, I think it should be still supported above the $1,155 level."
The article also points out recent earnings in Euroland companies have bolstered confidence in the economies of the region.

8:30 saw the release of the second-quarter GDP figure for the U.S. economy. The number was slightly below expectations: 2.4%. However, the number for first quarter GDP was revised upwards by a full percentage point: instead of 2.7%, the Q1 figure now stands at 3.7%. The chief drag on the 2Q number was net exports.

The gold market took to it fairly well at first. The metal has slumped down below $1,171 when regular trading began, but it shot all the way up to $1,176.90 between 8:25 and 8:40 AM. Since then, it slid all the way back down plus a little more. As of 8:49, the spot price was $1,170.10 for a gain of $3.60 on the day. The Kitco Gold Index assigned +$4.55's worth of change to predominant buying and -$0.95's worth to a strengthening greenback. The U.S. Dollar Index, after holding steady around 81.75 until 8:32, stumbled at that time but recovered later. As of 8:53, it was at 81.71.

Despite that spill, gold is still holding on to the bulk of its overnight gains. Physical buying has come in, and that demand has led to gold being supported. The metal might rack up its third daily gain in a row.

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