Gold Prices Fall in New York as Equities, Raw Materials Decline
By Pham-Duy Nguyen
Oct. 16 (Bloomberg) — Gold declined to a one-month low on speculation that investors will sell the precious metal to cover losses in other markets. Silver fell to the lowest since February 2006.
U.S. stocks and the Reuters/Jefferies CRB Index of 19 raw materials fell for a third straight day. The dollar gained as much as 1 percent against a weighted basket of six major currencies. Before today, gold was little changed for the year as the Standard & Poor’s 500 Index lost 38 percent while the CRB Index dropped 21 percent.
“The margin clerks are in control and they are selling what they can to raise capital,” Dennis Gartman, an economist and editor of the Suffolk, Virginia-based Gartman Letter, said today in a note to clients. “The dollar reigns supreme and that pressure on gold is manifest. Gold is doing quite well in terms of other commodities and relative to global equity markets.”
Gold futures for December delivery fell $34.50, or 4.1 percent, to $804.50 an ounce on the Comex division of the New York Mercantile Exchange, the biggest percentage decline for a most-active contract since Oct. 2. The price earlier dropped to $786.70, the lowest since Sept. 17.
Silver futures for December delivery fell 54.5 cents, or 5.4 percent, to $9.635 an ounce on the Comex. The metal earlier fell to $9.25, the lowest since Feb. 16, 2006. The price has dropped 34 percent this year. Gold is down 4 percent in 2008.
The Dow Jones Industrial Average fell as much as 380 points, or 4.4 percent, to 8,197.67 before paring losses. The index dropped 733 points yesterday.
“You don’t have a 700-point drop in the Dow that is not followed by margin-call liquidations,” said Jon Nadler, a senior analyst at Kitco Metals & Minerals Inc. in Montreal.
Gold should be trading closer to $760, based on the dollar’s strength, said Joel Crane, a metals strategist at Deutsche Bank AG in New York.
“Perhaps gold is behaving as it should,” Crane said.
Gold is priced in dollars and generally moves in the opposite direction of the U.S. currency. The Dollar Index is up 7.7 percent this year after being down as much as 7 percent in April. Gold had gained as much as 20 percent this year, touching a record $1,033.90 in March, as interest rate cuts sent the dollar to an all-time low against the euro in July.
“I’m short gold and long the dollar,” said Ron Goodis, retail trading director for Equidex Brokerage Group Inc. in Closter, New Jersey. “That’s the trend.”
Gold’s losses accelerated after the price fell below $822, said Ralph Preston, a futures analyst at Heritage West Futures Inc. in San Diego.
“This is a technical move,” Preston said. “We’re in a clear consolidation period. We’re not getting a buy signal.”
GOLD gained in New York as buying continued to emerge on any pullbacks, enabling the metal to rise despite a sharp US dollar rise.
December gold rose $US2.30 to $US790 an ounce on the Comex division of the New York Mercantile Exchange. December silver climbed US35.5 cents to $US9.69 an ounce.
Some of the selling pressure lately seems to have subsided, even though it may still be capping rallies, said Dave Meger, senior metals analyst with Alaron Trading. Also significant, he continued, was the bargain hunting occurring on pullbacks.
“The aggressive selling pressure coming from a firm US dollar and liquidation to get cash, at least for the moment, seems to have subsided,” Mr Meger said. “That, in my opinion, was the most noteworthy aspect of today. We didn’t see that constant pressure from liquidation that you had been seeing over the last several weeks.”
Some of this, he continued, may be the result of the steadier tone in equities, meaning market participants don’t feel pressured to sell holdings in other markets to raise cash.
“On the back of that, we saw a little bit of short covering and a bounce higher in both gold and silver,” he continued.
Silver, which recently had underperformed gold due to worries about industrial demand in an economic slowdown, appeared to bounce back more aggressively than gold, Mr Meger added.
Comex gold is largely range-bound at the moment, said Zachary Oxman, senior trader with Wisdom Financial. He puts the bottom end around $US760 and the top end around $US920.
“The US dollar strength is probably holding it down a little bit,” he said. Shortly before the metal closed, the US dollar index was up 0.797 point to 83.210.
Nevertheless, Mr Meger said it was significant that gold was able to hold up in the face of the US dollar gains, especially since a weaker US dollar so often was cited as the main catalyst for gold’s several-year bull run through the northern hemisphere summer.
Meanwhile, January platinum rose $US11.50 to $US892.50 an ounce, while December palladium gained $US5.55 to $US180.05.
Gold fell to the lowest price in five weeks as the dollar gained, eroding the appeal of the metal as an alternative asset. Silver rose.
Against a weighted basket of six major currencies, the dollar climbed to the highest since March 2007. This year, the measure is up 9.6%, while gold has dropped 8.4%.
”The dollar is in demand around the world,” said Leonard Kaplan, the president of Prospector Asset Management. ”That means everything comes down, including gold.”
Gold futures for December delivery fell $US22, or 2.8%, to $US768 an ounce on the Comex division of the New York Mercantile Exchange. Earlier, the price touched $US766.40, the lowest for a most-active contract since September 12. The metal reached a record $US1033.90 on March 17.
The dollar rose to a 19-month high against the euro on bets that the European Central Bank will cut borrowing costs at a faster pace than the Federal Reserve. The federal-funds rate is at 1.5%, down 3.75 percentage points from September 2007. The ECB’s main refinancing rate is at 3.75% after an October 8 cut from a seven-year high of 4.25%.
”The dollar pulled the rug out from under gold’s advance,” Jon Nadler, a senior analyst at Kitco Metals & Minerals, said in an e-mail. ”Gold still appears pointed toward the mid-$US700s, if not lower.”
Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, fell 1.9% to 756.3 tons yesterday from a record 770.6 metric tons on October 10.
Still, gold may fare better than other commodities as investors seek to avoid risk, Prospector Asset’s Kaplan said.
Before today, the Reuters/Jefferies CRB Index of 19 raw materials dropped 21% this year as energy and grains fell from records. Crude oil had declined 23%, and wheat is down 36%.
”Gold is better in relation to everything else that’s getting murdered,” Kaplan said.
Silver, which has trailed gold since the end of 2006, is attracting buyers, said Frank McGhee, the head dealer at Integrated Brokerage Services.
”Silver is relatively cheaper than gold, and there’s still tremendous physical demand,” McGhee said. Silver has broader industrial uses than gold.
Silver futures for December delivery rose 38.5 cents, or 4%, to $US10.075 an ounce. The price still has dropped 32% this year.
Rabu, 22/10/2008 08:19 WIB
Harga emas turun lagi jadi US$769,75 per ounce
oleh : Lahyanto Nadie
JAKARTA (bisnis.com): Harga emas hari ini bertengger di tingkat US$769,75 per ounce atau melemah dibandingkan posisisi kemarin yang sempat menembus US$800,15, menurut siaran televisi CNBC pagi ini.
Harga emas jatuh untuk empat sesi setelah pemerintah AS setuju menyiapkan dana US$250 miliar untuk menyelamatkan industri perbankan. Sebaliknya, harga perak justru naik.
Harga perak jatuh 1,9% kemarin ketika Standard & Poor’s 500 melonjak 12%.
Sementara itu, Harga emas untuk pengiriman Desember turun US$3 atau 0,4% menjadi US$839,59 per ounce di Comex Division of the New York Mercantile Exchange. Harga itu turun US$64 dalam tiga sesi sebelumnya.
Harga emas mencapai rekor pada tingkat US$1.033,90 pada 17 Maret.
Sejak Lehman Brothers Holding Inc. dinyatakan bangkrut pada 15 September yang ditolong oleh bailout pemerintah AS sebesar US$700 miliar, komoditas emas ditransaksikan pada tingkat antara US$767,40 dan US$936,30.
Kemarin harga emas melejit hingga tembus US$800 per ounce, setelah sebelumnya anjlok ke level terendah satu bulan. Pekan lalu anjlok 8,3% menjadi US$772,20 pe rounce, harga terendah sejak 15 September 2008.
UBS AG sebelumnya menyatakan harga emas berpotensi menembus US$800 dalam satu hingga tiga bulan ke depan. Namun level ini lebih rendah dari prediksi semula yakni US$925 dan US$975. Pada Oktober, impor emas India, konsumen emas terbesar dunia, naik dalam dua bulan terakhir. (ln)
Gold Falls to One-Year Low as Dollar Rallies; Silver Declines
By Pham-Duy Nguyen
Oct. 22 (Bloomberg) — Gold fell to the lowest price in more than a year as the dollar jumped, eroding the appeal of the metal as an alternative investment. Silver also declined.
Gold has dropped 12 percent this year as the dollar gained 11 percent against a weighted basket of six major currencies. The Reuters/Jefferies CRB Index of 19 raw materials today dropped to the lowest in four years. Gold reached a record in March as the dollar headed to an all-time low against the euro.
“The strengthening dollar is pressuring gold and commodity prices in general,” said Tom Hartmann, a commodity analyst at Altavest Worldwide Trading Inc. in Mission Viejo, California. “People aren’t tossing dollars out the window or giving up on paper currencies, so gold is just acting like another commodity at this point.”
Gold futures for December delivery fell $32.80, or 4.3 percent, to $735.20 an ounce on the Comex division of the New York Mercantile Exchange. Earlier, the price reached $720, the lowest for a most-active contract since Sept. 18, 2007. Gold rose to $1,033.90 on March 17, the highest ever.
Silver futures for December delivery declined 61.5 cents, or 6.1 percent, to $9.46 an ounce. The price is down 37 percent this year, after seven straight annual gains.
The dollar rose as much as 2.3 percent today against the basket of currencies, reaching the highest since November 2006.
“The selling of gold has been relentless,” Dennis Gartman, an economist and editor of the Gartman Letter, said in his daily report. “Commodity prices are very weak as the dollar and the yen are very strong and liquidation is the order of the day.”
Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, fell to 755.6 metric tons yesterday, down 1.9 percent from a record 770.6 ton Oct. 10.
Gold may fall to $700 as the dollar makes further gains against the euro, Hartmann said.
The euro fell below $1.28 for the first time since November 2006 on speculation the European Central Bank will cut borrowing costs at a faster pace than the Federal Reserve. The federal-funds rate is at 1.5 percent, down 3.75 percentage points from September 2007. The ECB’s main refinancing rate is at 3.75 percent after an Oct. 8 cut from a seven-year high of 4.25 percent.
“There’s just a perception that the U.S. has better tools to deal with the financial crisis than Europe,” Hartmann said. “There are too many competing interests in the euro region to come to a decision quickly.”
The 15-nation currency reached a record $1.6038 on July 15.
To contact the reporter on this story: Pham-Duy Nguyen in Seattle at email@example.com.
Last Updated: October 22, 2008 14:37 EDT
Today’s principal gold market feature was the rally that…wasn’t. Following a good (but likely fund-driven) run to levels near $765 earlier in the session, gold gave up all of its gains and tilted into negative territory before 3pm NY time. The rally that wasn’t, was in part undone by…the news story that wasn’t. It turns out that perma bulls mistakenly cheered a story that Iran had decided to move its reserve assets into gold. Then again, they also jumped all over other similar stories without proper verification. Makes for great spirit-building articles. Reuters issued a correction this morning:
“Iran is not converting reserves into gold, a cabinet minister said in remarks published on Wednesday, contradicting comments by an aide to the country’s president. “It is not correct that Iran is transferring its reserves to gold,” Economy Minister Shamseddin Hosseini was quoted as saying by the business daily Poul. Presidential adviser Mojtaba Samareh-Hashemi had been quoted on Saturday by the same newspaper as saying the reserves had been converted “to avoid future problems.” Central bank officials in the past said Iran was switching reserves into currencies other than the U.S. dollar because of U.S. and U.N. sanctions. They have also said the bank held some reserves in gold. But they have not usually given a breakdown.”
Hmmm. Makes one wonder about the recent putative $3.5 billion Saudi-investor gold purchases, and the imminent but also only putative decision by China to raise its gold allocation from 600 tonnes to 4,000 tonnes. One would think that a 142 tonne gold purchase over two weeks would have gold trading substantially higher, no? As for China, let’s see…first, they set out to buy oh, $82 billion worth of gold, or 200% of annual mine output…in the process, they shoot the price to…(insert any four-digit number you like, here)…following which, they then sit on their gold…(and give up any revenue on $82 billion)…then a very rainy day comes…suddenly, they have to sell say, 500 or 1,000 tons…(remember, they are not under WAG restrictions like other central banks)……they shoot the price the other way, to (insert a three-digit number here)…….and in the process, they do more damage to their remaining holdings than the proceeds of the sale (if they find buyers)…simply brilliant. Why, we can’t see why they did not proceed with this stupendous scheme years ago…
Let us suggest that IF China decides to raise its bullion reserve allocation, we will collectively learn about it way after the fact, and it will not be a visible maneuver in the markets. In the interim, these massive purchase stories are wonderful forum chatter material, but little else. Verification, first. No ‘anonymous’ sources either, please. Or, you might wait a few weeks and we could report on our findings following a visit to China.
On the more reliable side of the equation, here are the highlights of the latest World Gold Council report regarding Q3 gold demand. While it is advisable to distinguish statistical percentages of gains or losses in various areas, as they refer to dollar value and separately, to tonnage, the conclusions in the report are that retail investment demand was up on the quarter but that it could not overcome the disinvestment from institutional investors.
“Dollar demand for gold reached an all time quarterly record of US$32bn in the third quarter of 2008 as investors around the world sought refuge from the global financial meltdown, and jewellery buyers returned to the market in droves on a lower gold price. This figure was 45% higher than the previous record in Q2 2008. Tonnage demand was also 18% higher than a year earlier.
Identifiable investment demand, which incorporates demand for gold through exchange traded funds (ETFs) and bars and coins, was the biggest contributor to overall demand during the quarter, up to US$10.7bn (382 tonnes), double year earlier levels, according to Gold Demand Trends, released today by World Gold Council (WGC).
The figures, compiled independently for WGC by GFMS Limited, show retail investment demand rose 121% to 232 tonnes in Q3, with strong bar and coin buying reported in Swiss, German and US markets. The quarter also witnessed widespread reports of gold shortages among bullion dealers across the globe, as investors searched for a haven. Overall, Q3 saw Europe reach an all time record 51 tonnes of bar and coin buying and France became a net investor in gold for the first time since the early 1980s.
Gold ETFs enjoyed a record quarterly inflow of 150 tonnes in Q3, boosted by extreme levels of economic and financial uncertainty. The peak in inflows occurred in late September, triggered by the collapse of Lehman Brothers and a fear of banking sector failures. Net inflows surged by an unprecedented 111 tonnes during 5 consecutive trading days, equivalent to US$7bn.
As the financial crisis deepened these increases in identifiable investment demand were offset by outflows in “inferred investment”. This was characterised by hedge funds liquidating investment positions in gold as they were forced to raise cash and by institutions liquidating commodity index investments, including gold, as fears of recession deepened. The trend largely reflects gold’s better performance relative to other assets and also explains why the gold price did not perform better during the quarter in the face of very strong demand.
Q3 saw a record US$18bn of consumer demand for gold jewellery with buyers returning to the market on lower price points, around and below US$800, demonstrating the underlying positive sentiment towards gold and its recognition as a store of value. The biggest contributor to the positive trend was India which witnessed a rise of 65% in US$ value or 40 tonnes relative to previous year levels, with the Middle East, Indonesia and China all enjoying rises of more than 40% in value or 10% in tonnage. There were however, strong declines in Western markets with the US down 9% in value and 29% in tonnes, and the UK down 5% in value and 26% in tonnes due to the overall decline in the retail market.”
You can see and hear one fund manager’s opinion on the WGC findings in this Dow Jones report filed by our good friend Simon Constable today:
New York spot prices rose to $764.30 intra-day but the rally dematerialized and the latest quotes indicate gold at $736, off by $2.00 per ounce. Silver fared somewhat worse, losing 32 cents on the day, to $9.27 per ounce. Platinum fell $20 to $810 and palladium had a really miserable day showing a near 14% loss down to $187 per ounce. Yesterday’s JM interim report indicating a possible fall in the metal to $125 no longer appears incredible. The dollar ended up gaining on the day, rising to 87.45 on the index, while oil fell 60 cents to $53.80 pr barrel.
Deflation risks are rising by the day, as illustrated by the largest monthly consumer price drop since recordkeeping started, back in 1947. The Dow fell another 300 points on this and the equally (bad) record-setting housing starts numbers gave sellers all the excuses they needed to send stock indices to their lowest levels in five years. The Fed sees a contraction lasting through (at least) mid-2009 and hopes it does not turn into a negative price spiral. Not when all that’s left in the barrel is one tiny little percent.
On a final note, we note that gold open interest rose by 4,000 giving one more possible hopeful angle to the current market formula. If deflation would just go away. Maybe we will find a story about the return of inflation. Know any sources?
Kitco Bullion Dealers Montreal