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

To: maceng2 who wrote (96871)	1/5/2004 7:41:14 PM
From: lorne	Respond to of 116762

Gold Highest in 14 Years, Above $420 Mon January 5, 2004 10:18 AM ET By Martin Hayes reuters.com LONDON (Reuters) - Gold started the first week of 2004 as it ended 2003 -- charging to its highest since February 1990 as the dollar crumbled against the euro and the yen and speculative funds maintained their appetite for precious metals. Spot gold was at $420.75/421.45 an ounce at 1447 GMT, well up from $416.25/416.75 at European opening and what had been a long-standing objective at $417.70. "The precious metals are all off to the races -- they are all up on the U.S. opening," analyst Kamal Naqvi of Barclays Capital said. New York futures markets re-opened for the first time since December 31 on Monday, and all the precious metals leapt higher. Silver jumped to its highest since April 1998, while platinum rose some $20. Bullion peaked at $422.20, and analysts said they expected the metal to notch up further gains given voracious fund purchasing, the trends on foreign exchanges and gold's close inverse relationship with the dollar. Analysts said gold could touch $450, the highest in 16 years, because of dollar weakness, fears of fresh attacks on the United States and persistent violence in Iraq. Naqvi said the important CTAs (commodity trade advisors) would be looking to continue acquiring commodities, and that fresh funds would flow into the sector early in 2004. "People were looking to see if that would evidence itself (today) and it did," he added. DOLLAR WEAKNESS The dollar fell to a three-year low against the yen, slipping below 106.50 as broad selling took it through key technical support. The dollar was under pressure as comments by Federal Reserve governor Ben Bernanke reinforced a view that U.S. interest rates will stay low for some time. The dollar traded at a low of 106.48 yen, while against the euro it had dropped to 1.2695 on persistent worries about a widening U.S. current account deficit. "With analysts predicting a test of 1.30 in the euro by the end of the month further gains in gold seem likely," James Moore of TheBullionDesk.com said. Although the market is looking over-extended on technical charts after breaking through two key levels on Monday the 1990 peak is within range. "You have to say that $424.50 is the next target," Naqvi said. Beyond that, prices would be back at levels last seen in 1988. Broker HSBC said the past two years had shown how the dollar/euro rate had provided the dominant influence in gold. "This has been largely irrespective of developments in the underlying fundamentals of supply and demand, changing producer strategies with respect to hedging, the impact of a higher gold price on mine production plans, the ongoing weakness in physical demand and/or whether or not there will be a renewal of the Central Bank Gold Agreement," HSBC said. The reference was to an agreement among leading European central banks to limit official gold sales, which expires in September. "We expect the dollar to continue weakening, with a third quarter target of 1.35 against the euro, implying a gold price of around $435," HSBC added. Gold rose about 20 percent in 2003 as geopolitical tensions and a sliding dollar raised its safe-haven status. A weaker dollar makes dollar-denominated gold cheaper for holders of other currencies, especially the euro. Gold, which in early 1990 climbed to $425, showed its resilience last month, holding above $400 despite the capture of former Iraqi President Saddam Hussein, which lifted the dollar. In other precious metals, silver rose to $6.25 at one stage then settled at $6.14/6.16, versus $5.93/5.95. Spot platinum was quoted at $832/836 versus the last New York level of $811/816. The metal hit a fresh 23-year peak of $858 on December 18 but has since fallen on profit-taking. Sister metal palladium stood at $195/199, against $191/196. Previous 1\| 2

To: maceng2 who wrote (96871)	1/5/2004 8:20:39 PM
From: IngotWeTrust	Read Replies (4) \| Respond to of 116762

PB, I can't conceive any scenario mentally which would trigger an "abrupt" about face via our Fed Reserve which would halt the PoG's rally, keying in part off of the dollar's steep and continuing descent. The FR is not keen on "abrupt" moves. As I've said before, there are 4 interest rate phases, starting at any point of the cycle where one becomes aware of this truth: 1) Interest rates falling 2) Interest rates (having already fallen,) stabilizing and doing nothing for a period of time. 3) Interest rates Rising 4) Interest rates (having already risen,) stabilizing and doing nothing for a period of time. In the above litany, we are most definitely in "#2" articulation. I propose, PB, that prior to there being a #3, we will observe that rising "interest rates pressure" has already occured --in a stealth manner--measured by any number of metrics, These shifts will change, much like the tempo of "paddling of little duck feet below the water's surface" changes as the economy is either propelled or falters. The FR is REACTIVE, not proactive. Hasn't been proactive since Volker wrested control of FR from good old Arthur Burns. GS among others will trumpet any shift prior to it actually being announced. Bernake, for example, will suddenly take ill and be forced by his doctors to submit to a physical, etc.<grin>