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To: 4figureau who wrote (3474)	2/27/2003 9:41:23 AM
From: 4figureau	Respond to of 5423

UBS Warburg: Gold’s moves over the last couple of days confirm our view that the metal will remain extremely volatile over the coming months. War, although possibly not imminent, continues to encourage speculators to play gold from the long side (or at least deterring shortselling), while investors appear to be attracted to gold’s economic rather than risk aversion characteristics. Gold: News: Russia's gold and foreign currency reserves should contain 50% of dollars and 30% of euros, rather than the current 70% dollars and 25% euros, First Deputy Finance Minster Alexei Ulyukayev said Wednesday. He said that 10% of the reserves should be in gold and the rest in currencies such as the Swiss franc and sterling. Currently, gold and other currencies make up 5% of reserves. "It's important to leave quite a high percentage of dollars because the majority of foreign trade transactions are done in dollars in Russia, especially with oil and gas," Ulyukayev said. As of Feb. 14, foreign exchange and gold reserves stood at $51.4 billion, up $1.2 billion on the week. Earlier this month, Central Bank Deputy Chairman Oleg Vyugin said that the dollar share in the structure of foreign exchange reserves will predominate as long as oil, gas and metal contracts in Russia, Japan, China, India and the whole of Asia are concluded in dollars (Reuters). Trading: Gold had rather a quiet day yesterday with neither the OTC expiry not higher crude (more weather / inventory than war related, we believe) could lift the metal. Rather, gold needed a rumour of a suspect terrorist incident in Connecticut to see t he market jump from $353 to $356 with two US investment banks noted buyers. Although the suspect vehicle proved to be no threat (the package was reported to be a sophisticated anti theft device) gold held onto most of these gains until some MOC selling from one European bank slapped gold lower. In Asia further small Japanese speculative buying was seen but good offers were reported above $356/oz. Early European buying interest supported gold in the face of Japanese selling in the afternoon session. Gold has remained quiet in early European hours with some investor interest apparent in the market. View: Recent speculative long liquidation has led to more room for traders to get back into gold. In the near term, we continue to expect gold to trade higher on worsening geopolitical tension. Silver: Trading: After opening with some decent support evident, silver came under some pressure as speculators sold the May contract. Some support was found around the $4.62 level and then silver bounced to the $4.65 / 4.67 area with little trading. View: The rally in silver appears to have been stopped in its tracks by the pull-back in gold. Beyond these short term moves, silver should further benefit from the weaker US dollar (as will all dollar-denominated commodities), but since silver’s applications are largely industrial in nature the metal will continue to be hit by slowing economic activity. thebulliondesk.com