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Gold/Mining/Energy : A to Z Junior Mining Research Site -- Ignore unavailable to you. Want to Upgrade?

To: 4figureau who wrote (1416)	9/17/2002 11:28:10 AM
From: 4figureau	Read Replies (1) \| Respond to of 5423

UBS Warburg: A news-filled morning in the gold market makes predicting the short-term moves in bullion particularly tough today. The news that Iraq will reportedly allow weapons inspectors unrestricted access is negative for risk aversion plays such as oil and gold. The WGC gold demand figures were also poor, if largely expected. However, the news from Barrick that it will materially cut its hedgebook by the end of 2003 strengthens the longer-term picture for the metal. Gold: News 1: Barrick Gold unveiled a growth plan that plans to double profit by 2006 according to the company. At the same time, Barrick announced that it would reduce its forward sales position by one-third to 12 million ounces by the end of 2003 (Reuters). This news was unexpected, as previously we had expected the company to reduce its net position by around 1 million ounces by the end of 2002. We were expecting a reduction of the global producer book of about 8 million ounces for 2003; in light of this announcement we will be reviewing this estimate. News 2: Q2-02 gold demand fell by 14.3% year on year according to statistics released by the WGC this morning. Jewellery demand fell by 15.8% to 580.8t; industrial demand fell by 6.4% to 74.4t and investment demand declined by 11.7% to 56.8t. One of the major contributions to the fall in gold demand was a 40.5% fall in Indian gold demand to 126.9t. Japanese first half gold demand nearly doubled to 87 tonnes after a 196% rise in investment demand (Reuters). With the exception of the decline in investment demand, these numbers should not come as a major surprise to gold market professionals as Indian demand in particular has been hit by the higher spot gold price and concerns about a weak harvest. We are interested in the reported decline in investment as, at first glance, this is not substantiated by our own activities. The WGC will give a presentation of these results this morning, which we are eagerly awaiting. Trading: In New York gold opened below the previous day’s lows and quickly filled that gap and despite steady professional selling gold made its way steadily higher through the day on European and US professional buying and short covering from one US investment bank that had been a noted seller on the lows. In Asia, gold dropped two dollars on the news that Iraq had agreed to unconditional resumption of weapons inspections and decent buying only emerged around the $314 level. After lunch gold traded quietly until the European open and gold then rallied sharply on the Barrick story (above) trading as high as $315.50 before slipping slowly back towards $314.75. View: With global political tension receding further gold may test support around $313, however, the Barrick news will give heart to traders who are focussed on the longer term macro picture for gold. 1m 3m 6m 1y 3y 5y 10y USD/XAU Impl Opt Vol (Mids) 17.85 16.8 15.0 14.87 13.0 12.3 12.0 Gold Fwd Rates 1.73 1.65 1.53 1.39 Silver: Trading: In New York silver opened quietly and spent most of the day in a narrow range, edging higher only after gold headed towards the highs of the day. Light professional and speculative buying was noted. View: Against our expectation silver speculators continue to get shorter the metal and this, we believe, is setting the market up for a sharp rally at some point in the coming months. kitco.com