WSJ -- SPDR Gold Trust now has 832.57 metric tons of gold ..............................
This sure sounds to me like a whole bunch of people using the old : "buy high, sell low" - technique.
Jon.
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COMMODITIES
JANUARY 24, 2009
Gold Hits $895.30 Amid Flight to Safety
By ALLEN SYKORA
Gold prices jumped to the highest levels in three months as a continued flight to safety by investors triggered so-called technical chart-based buying.
The price of the nearby January gold futures contract rose $37.10, or 4.3%, to $895.30 an ounce on the Comex division of the New York Mercantile Exchange, the highest settle since Oct. 8. The price of the most-active April contract rose $37.20, or 4.3%, to $897.70, after hitting as high as $905.50, the strongest level since Oct. 10.
"We're continuing to get what appears to be traditional flight-to-quality buying, even though the dollar continues to be strong," said Michael Gross, futures analyst with OptionSellers.com.
A stronger dollar typically pressures gold prices. But in the current environment, weakness in European currencies caused by troubles in the European banking sector is translating into buying of gold, said one trader.
"I think we're seeing people move into gold simply because they don't want to get caught in anything else," said Sterling Smith, vice president with FuturesOne. "If you want to be in dollars, you're either sitting on cash or very low-yielding instruments."
Bart Melek, commodity strategist with BMO Capital Markets, cited more flows into exchange-traded funds as an example of strong gold demand. Holdings backing the SPDR Gold Trust, the world's largest gold ETF, climbed 13.46 metric tons Friday to a record 832.57 tons. A metric ton is equal to 2,204.62 pounds.
Momentum-based buying was triggered when gold accelerated through the 200-day moving average, an important technical-chart point, and broke above the late-December highs.
George Gero, vice president with RBC Capital Markets Global Futures, said some hedge-related selling from mining companies appeared to occur around $900, but this was overrun by investment demand and buying back of previously sold positions. He also cited speculative buying.
A key for gold may be what happens around $900, Mr. Smith said. The market had trouble maintaining momentum above that price in the fall.
Meanwhile, gold has shown a tendency to peak around roughly the third week of January, though last year it hit its record high in March, said John Person, president of NationalFutures.com.
In other commodity markets:
CRUDE OIL: Prices rose for a fifth trading day in a row, helped by a 7.5% jump in heating-oil prices on the back of forecasts for below-normal temperatures in the Northeast. Also, additional evidence surfaced that the Organization of Petroleum Exporting Countries continues to implement crude output cuts. Oil for March delivery rose $2.80, or 6.4%, to $46.47 a barrel on the New York Mercantile Exchange.
SUGAR: Prices rallied to 2½-month highs on news India might ease duties on raw imports because of declining cane production. ICE Futures U.S. March sugar rose 0.32 cent to 12.70 cents a pound.
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