market ignoring prospect of more Russian exports:
Updated Mon Jul 20 16:12 ET
NY Precious Metals Review: Sep silver hits 2 1/2-week high
By Melanie Lovatt, Bridge News
New York--Jly 20--COMEX Sep silver futures gapped higher and then
climbed throughout the day to settle up 9.7c at $5.47 per ounce after
hitting a 2 1/2 week high of $5.475. Traders said that the jump was
primarily technical and was made as silver pushed above buy-stops. Gold
activity was similar to that of silver, while platinum and palladium fell
back on profit-taking after big price jumps last week. News that Russian
president Boris Yeltsin signed a decree allowing the export of raw
materials containing precious metals by domestic organizations was also
received as bearish.
* * *
Silver climbed on "short-covering...They were fishing for some stops,"
said one trader. He noted that silver had climbed Friday and was extending
its jump, but said volume was thin and activity relatively subdued.
Aug gold also rallied, hitting a 12-day high of $296.90 per ounce, in
an extension of last week's short-covering. "The only thing of interest was
the last 20 minutes when some trade buying caught the funds short," said
one trader. COMEX prices were pushed higher as spot gold broke above $295
resistance, said traders, pegging the next resistance level for spot at
$297.
One trader noted that with only 10 days left on the Aug contract, it
would probably climb higher as a whole slew of fund shorts proceeded to
cover. "They will probably cover...They won't roll over," he predicted.
Data from the Commodity Futures Trading Commission Friday showed that
as of Jly 14, there were 44,177 short non-commercial contracts of 100-troy
ounces compared with 6,518 long non-commercial contracts.
The market was nonplused by news today that Russia banks had bought 80
tonnes of gold from domestic producers, with 50 tonnes of this earmarked
for export.
Platinum and palladium futures prices slipped today, both succumbing
to profit-taking after last week's price runup, and bearish news out of
Russia, said traders.
Oct platinum settled down $5.40 at $393.60 per ounce and Sep palladium
settled down $1.20 at $337.05 per ounce.
Russia's Yeltsin signed a decree allowing the export of raw materials
containing precious metals this by domestic organizations, the Kremlin
press service said today.
The decree said the decision is aimed at "stabilizing the Russian
metals industry."
The decree said exports will be permitted "to organizations within the
volumes stated in an addendum," which was not released.
Also, the Central Bank of Russia (CBR) said it had started talks with
unspecified Western banks over plans to back commercial loans with
palladium. The Russian press reported that the Central Bank wanted to
deposit some 200 tonnes of palladium with Western banks against loans of
$1.8 billion.
Also, the (CBR) said it will not buy any platinum or palladium this
year. Head of the bank's precious metals department, Sergei Kyshtymov said
that a mistake had been made in 1996 when the bank bought large stocks of
these metals. Russia liberalized its gold and silver market last year while
platinum and palladium are restricted. Sales of the metals are permitted
only by special decrees by the president and government within quotas
defined each year.
Traders were unsure what to make of the latest news. "We'll have to see
whether this is ultimately bullish or bearish...So often with Russia it's
unclear," said one trader. "It's difficult to call..Any news seems to be a
contradiction," he said.
Another market observer noted that some of the Russia shipments of
palladium had already started to trickle into the US, so he was unsure what
the latest decree-signing would imply. "Whether this means they will
finally export to Japan remains to be seen," he said.
On Friday Oct platinum had edged up to a 3-month high of $404, while on
Thursday Sep palladium hit a 2-month high of $344. Traders said that
platinum and palladium had both been pushed higher on fund short-covering
and fresh buying last week.
They noted that the decision last Tuesday by the Central Bank of
Russia to use palladium as collateral for loans during times of emergency
was initially received as bullish, helping prices to rally.
However, some traders continue to maintain it is ultimately bearish,
suggesting that Russia could default on its loans, thus releasing palladium
onto the open market.
SETTLEMENT PRICES
--Aug gold (GCQ8) at $296.70, up $1.60; RANGE: 296.9-295.2
--Sep silver (SIU8) at $5.47, up 9.7c; RANGE: 5.475-5.410
--Oct platinum (PLV8) at $393.6, dn $5.4; RANGE: 399.0-393.5
--Sep palladium (PAU8) at $337.05, dn $1.2; RANGE: 346.0-320.63
SPOT PRECIOUS METALS PRICES:
Late New York London Late Tokyo
Gold (KRCGL) 295.60-296.10 294.30-295.00 293.90-294.20
Silver (KRCSL) 5.45-5.48 5.39-5.43 5.32-5.55
Platinum (KRCPL) 393.00-395.00 395.00-397.00 395.00-397.00
Palladium (KRCPA) 338.00-348.00 337.00-347.00 338.00-348.00
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