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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: maceng2 who wrote (95662)	7/30/2003 12:12:04 PM
From: maceng2	Respond to of 116796

Gold Poised for $370/Oz, But Beware the Longs Mineweb (Johannesburg) July 29, 2003 Posted to the web July 30, 2003 Daniel Thöle Gold looks poised for a run at the $370/oz level, but traders have warned investors to brace for a backward slide in the metal as the threat of the liquidation of long positions grows. Investor sentiment toward gold on the New York Commodities Exchange (Comex) suggests a positive swing in the market last week, which drove the market higher. According to a note published by one London-based dealer this morning, speculators, jarred from weeks of apathy toward bullion, added 1.2 million ounces to non-commercial long positions. Overall, combined long positions hit 7.25 million ounces. July is "Join AllAfrica Month" The dealer said with total long position of 226,000 lots on Comex, the market looked vulnerable. He said recent peaks in open interest had preceded falls in the gold price as the futures market became saturated. He said gold's peak in February of $389/oz had coincided with open interest of 241,000 lots - the price crashed after longs liquidated their positions. Recent peaks since then have coincided with similar peaks in long positions. He said $359/oz provided the next level of support for the market. The metal, he said, would move into the mid-$350/oz range if fund buying dried up at the support level. But all is not lost. The trader said increased fund buying at the current price level could drive the price still higher. Both physical demand and fund buying have been underpinned by euro strength over the past week, giving gold strong support. But dealers have also warned that gold's current position remains precarious, because of its sole reliance on euro strength. A Johannesburg-based trader said positive US economic data released last week had failed to convince the market of the strength of US economy. The uncertainty had propped up the euro, which has been the primary driver for gold's performance all year. The trader said despite the euro's current strength, the trend was easily reversible and the market would view any move below $1.1420 as weakness, threatening gold's current strength. The single currency was last trading at $1.1530. Bullion has surprised punters by holding onto the gains it made midway through last week. On Tuesday it gained more than $9/oz in a single trading session to surge through the $360/oz level. Gold was last at $363.50/oz at midday in Johannesburg (29 July), after running as high as $367.50/oz last night. Notwithstanding the threat of long liquidation, another dealer at a major South African bank said a move as high as $371/oz was possible, provided prices above $366/oz could be sustained. "It's good news for gold bulls, and there are a lot of them out there at the moment - but we have to be careful, its all on the back of weak dollar," he said. The trader said there should be major buying interest at the $361/oz level if gold retraced recent gains, as the weaker dollar has led major funds to return to the gold market. Equities hammered on rand Gold's run didn't help South African gold shares - the rand's gains back to the R7.26 level counteracted gold's strength, and the JSE's gold index was 3.37 percent lower at 2162 at 11am South African time. Marginal producer Durban Roodepoort Deep led the index lower, dropping 5.26 percent to R18, Gold Fields was 4.04 percent lower at R86.35. Harmony Gold lost 3.62 percent to trade at R90.50 and AngloGold gave up 2.39 percent to R245. allafrica.com