Found this posted on another metals site:
August 27, 2002, Spot gold in New York traded higher at $312.90 an ounce, up $2.90 from
yesterday’ close.
Gold was supported by a weaker stock market after consumer
confidence data revealed weaker than expected numbers.
The Conference Board
said its Consumer Confidence Index fell to 93.5 from a revised 97.4 in July. Analysts had been expecting a reading of 97.0. The industry group’s index, based
on a monthly survey of some 5,000 U.S. households, is closely watched because consumer confidence drives consumer spending, which accounts for about two-thirds of the nation’s economic activity. Durable goods orders increased and that was initially perceived as bullish for stocks, except much of that increase has been attributed to zero percent financing in the auto sector so this data carried
little weight and investors focused on the consumer confidence data instead.
Traders said they expected gold to breach resistance at $312.00 before the end of the week.
Geopolitical tensions are rising and the preparations for war continue. U.S. warplanes on Tuesday attacked a radar site in a northern Iraq "no-fly" zone and an air defense command facility in southern Iraq, the U.S. military said, citing hostile acts by the Iraqi military. The Defense Department said the planes attacked the sites after the Iraqi military targeted U.S. and British jets
policing the two no-fly zones.
With increased tensions between the U.S. and Iraq,
"we would not expect too many short positions (in gold) to be built by U.S. players in the next few days," said Frederic Panizzutti of GoldAvenue, a major gold online trading company.
Futures prices in New York broke above $312,
"opening the room for more upside momentum," he added.
Physical activity for gold around the world has also picked up these recent days and "will be one more
positive factor providing the necessary support for a move toward $315," Panizzutti said.
London gold was fixed this afternoon at $310.50 an ounce, up from $309.40 an ounce at the morning fixing.
"Gold has rallied...on renewed concerns about
potential U.S. military action in Iraq," said UBS Warburg analyst John Reade. Spot gold hit a high of $311.40 an ounce, up from New York closing levels of
$309.45/309.95 an ounce on Monday and late European levels of $308.90/309.40. "It would appear only a clear break of $312.00 would attract fresh investment buying and aggressive short-covering," said Standard Bank
London in a market note. Yesterday, U.S. Vice President **** Cheney on Monday laid out the White House's case for pre-emptive action against Iraq, citing mortal danger to the United States. "The continued noises coming from
North America on what they intend to do about Iraq have pushed gold higher," one trader said. U.S. Vice-President **** Cheney endorsed pre-emptive action against Iraq, saying it was safer to act against Baghdad's weapons program than to do nothing. Separately Presidential spokesman Ari Fleischer said White House lawyers had concluded President George W. Bush had authority to take military action against Iraq, without special congressional approval.
Gold prices appear to be reacting as a safe haven as talk of war and increasing geopolitical tensions dominate the news. "Gold seems happy to trade $306-$311 for the moment, but continued U.S. economic uncertainties and war tensions should add to its safe-haven value," said James Moore, analyst at TheBullionDesk.com. Rhona O’Connell of the World Gold Council notes in the Daily Gold Market
Commentary:
The situation with respect to the Middle East and by association the
oil market has had an increasing impact on gold market sentiment over the past
few days and will continue to attract attention, although the dollar and equity
markets are still cited as the primary elements driving short term intra-day
direction.
The background fundamentals reflect steady physical buying at the lower levels, which is defining the lower end of the market’s present range as standing between $305 and $308/ounce.
Spot gold jumped Tuesday in Asia, as a weaker U.S. dollar confounds earlier
expectations that gold wouldn't move much from Monday, traders said.
The weaker dollar is likely to have caught some traders and funds short, whose
covering subsequently pushed gold higher, said a European bank trader.
Some
nervousness in the market as the anniversary of the Sept. 11 terrorist attacks on
the U.S. approaches is also helping gold, said Martin Mayne, a bullion trader with
NM Rothschild & Sons (Australia) Ltd.
Thom Calandra of CBS Marketwatch notes in today’s article:
Adrian Day, another longtime gold investor and president of Global Strategic Management in
Maryland, says American investors are puzzled by gold's gyrations this summer.
The metal has actually lost ground during the horrific summer season for the U.S.
stock market.
"More and more investors seem to be buying into the arguments
that the markets are managed," says Day, reflecting growing reports that New
York City banks are using derivatives to deflate gold prices.
"Whereas two years
ago, this was very much a fringe argument, it is now more widely acknowledged
as a valid possibility."
Mary Anne and Pamela Aden, sisters and editors of the
Costa-Rica-based The Aden Forecast, are confident the gold sector will outpace
other investments this year.
With that performance will come greater respect for
the metal.
"Since gold has been down to dull for most of the past 20 years while
stocks were all the rage, most investors don't know much about it," the sisters told
me in a joint e-mail.
"But they have seen gold and gold mutual funds outperform
all other investments this year.
If this continues, it'll attract more attention."
Sinclair, the grizzled head of Tan Range, says Joe Q. Public will sit up and take
notice when gold prices make their next move higher.
"I would tell Joe Public that
if he sees gold close above $330 and then above $354, he should do everything
to set his financial houses in order," Sinclair says.
"It means there are serious
problems on the horizon well beyond the decline in the stock market and gas
costing more.
Volatility in the equity markets means Stay Away."
Comment:
Oil imports keep arriving in the United States and yet oil inventories have decreased over the last four months.
So where has this oil gone?
It appears that the oil is going into the Strategic Petroleum Reserve in anticipation of military
action against Iraq in coming months.
Even though Saudi Arabia has as much as 6
million barrels/day excess capacity, oil prices are moving closer to $30/barrel for light sweet crude.
It appears that war is on the horizon whether or not the U.S. will have any allies in this latest venture
against Iraq.
This afternoon it was announced that Saudi Prince Bandar, who is also the Saudi ambassador to the
United States, is visiting President George W. Bush at his ranch in Crawford,
Texas.
It is reported that the prince was told that Saddam Hussein is a “menace”
in the Middle East and he must be dealt with.
The pressure is being put on Saudi
and others to build support for the coming war.
The equities markets are
deteriorating once again.
It appears that the markets have “topped out” as the fall
months are rather difficult periods for the stock markets.
Most of the stock market crashes have occurred in September and October. September is also the
critical “pre-announcement” month for the third quarter.
It is expected to be a
“weak” month for the markets.
The price of gold has held up well during these
“summer doldrums” when trading is usually very light, however, the rising
geopolitical tensions in the Middle East and increased buying in Asia have given
the precious metals a boost.
Gold buying has begun to pick up according to the
World Gold Council as Central Asians gear up for the festival season.
***Many bullion dealers report sharply increased sales of precious metals in what has been a typically
slow season in years past.*** |
