Gold, other metals fall as U.S. dollar rallies
NEW YORK (Nov 26) Gold and other metals futures fell Friday, as investors sold commodities and stocks and bought the U.S. dollar following renewed concerns over debt levels in the euro zone.
Stocks sell off on euro fearsStocks slump Friday amid continuing European sovereign-debt fears, even as Spain, Portugal continue to say they don't need bailouts. In the US, a better holiday season is widely expected. Rising tensions between North and South Korea, meanwhile, also pushed the dollar higher.
�Normally the headlines from Korea and the lower stock market would help gold, but the weaker euro [is] helping the dollar counters,� said George Gero, metals analyst at RBC Wealth Management, in a note.
Gold for December delivery slumped $17.10, or 1.3%, to $1,355.80 an ounce on the Comex division of the New York Mercantile Exchange.
The contract earlier hit an intraday low of $1,350.50 an ounce.
U.S. markets were closed on Thursday for the Thanksgiving holiday and volumes are expected to remain thin on Friday during a shortened trading session for most markets. Floor trading for metals, however, kept its hours and settles at its regular 1:30 Eastern time. See slide show of so-called Black Friday shopping.
How SPDR brought gold to investingThe revolution that opened gold investing to the masses and helped spur a record-breaking bull market was hatched in an act of desperation by an obscure gold-mining trade group. �Extended Thanksgiving holidays will likely keep trade thin and the [metals] complex remains vulnerable to further pressure as traders look to lock in profits and maintain cash positions to cover margin requirements,� said James Moore, London-based analyst at Fast Markets, in a research note.
Also pressuring gold prices was a rally in the U.S. dollar.
�The main negative factor is the firm U.S. dollar, which has risen to its highest level in two months versus the euro,� wrote analysts at Commerzbank in a note to clients. �Furthermore, the increase in the margins for gold futures trading on the Shanghai Futures Exchange is also having an adverse effect.�
The dollar index , which tracks the performance of the greenback against a basket of other major currencies, rose 0.6% to 80.36.
Dollar strength tends to pressure dollar-denominated commodity prices because it makes those commodities more expensive for holders of other currencies.
Other metals futures also dropped sharply.
Silver for December delivery fell, to $26.77 an ounce in electronic trade.
GoldCore, however, has forecast silver has some ways to �catch up� with gold.
�Silver, unlike gold, remains well below its nominal high of just over $50/oz in 1980,� the firm stated in a research note. �Hedge funds and investors with a knowledge of the technicals are targeting this level and will likely continue buying and accumulating until the price level has been reached.�
Palladium for December delivery slumped 2.5% to $678 an ounce. December copper dropped 2 cents to $3.74 a pound.
Saturday, November 27, 2010
Gold Drops
Gold Drops, Trimming Weekly Climb, as Strengthening Dollar Erodes Demand
LONDON (Nov 26) Gold declined in London, cutting a weekly gain, as a stronger dollar curbed demand for the metal as an alternative investment. Other precious metals dropped.
The dollar gained against the yen as North Korea�s state- run Korean Central News Agency said planned naval exercises by South Korea and the U.S. moved the peninsula �closer to the brink of war.� The greenback rose to a two-month high versus the euro amid concerns Europe�s sovereign-debt burdens are worsening. Gold, which reached a record $1,424.60 an ounce on Nov. 9, usually moves inversely to the U.S. currency.
�Bullion prices have been under pressure as a result of the decline in risk sentiment,� James Moore, an analyst at TheBullionDesk.com in London, said in a report. Still, gold may �remain underpinned by investment bargain hunting as investors look to diversify against the volatile macro-economic and geopolitical background.�
Immediate-delivery bullion lost $15.75, or 1.1 percent, to $1,359.60 an ounce at 11:42 a.m. in London. Prices are up 0.5 percent this week. The metal for February delivery was 1 percent lower at $1,361.40 on the Comex in New York. Floor trading was closed yesterday for Thanksgiving in the U.S. and electronic trades are booked with today�s for settlement purposes.
Bullion fell to $1,366.50 an ounce in the morning �fixing� in London, used by some mining companies to sell output, from $1,373.25 at yesterday�s afternoon fixing.
Irish Bailout
Borrowing costs for the euro region�s most-indebted nations are surging as Ireland�s acceptance of a bailout of its banking industry stokes speculation that other countries will have to seek aid. The Financial Times Deutschland reported that euro- area policy makers are pushing Portugal to seek assistance from a 750 billion-euro ($991 billion) bailout fund. The country isn�t being pressed to use the facility, an official at the office of Prime Minister Jose Socrates said.
Irish Finance Minister Brian Lenihan said yesterday that while the size of a bailout from the European Union and the International Monetary Fund hasn�t yet been determined, an amount of around 85 billion euros �has been mentioned.� The government said this week it will cut spending by about 20 percent and raise taxes over the next four years.
�We are following the euro to a certain extent and the euro is back to its weak point,� said Darren Heathcote, head of trading at Investec Bank (Australia) Ltd. The Korean conflict �is still in the back of people�s minds. There�s a possibility of further conflict and that is helping to support gold.�
�Escalated Confrontation�
President Barack Obama has dispatched an aircraft carrier to take part in military drills in the Yellow Sea in a show of strength after North Korea this week shelled a South Korean island. North Korea warned that any �escalated confrontation� will lead to war, KCNA said in an e-mailed statement.
Explosive shots, coming from the direction of North Korea, were heard on South Korea�s Yeonpyeong Island today, said a spokesman at South Korea�s Joint Chiefs of Staff who declined to be identified, citing military policy. The military is investigating, he said.
Eleven of 15 traders, investors and analysts surveyed by Bloomberg, or 73 percent, said the metal will rise next week. One forecast lower prices and three were neutral.
Silver for immediate delivery in London fell 3.6 percent to $26.5875 an ounce. It reached a 30-year high of $29.36 on Nov. 9 and is up 58 percent this year.
Palladium dropped 4.7 percent to $665.50 an ounce. Platinum was 1.2 percent lower at $1,640.68 an ounce.
LONDON (Nov 26) Gold declined in London, cutting a weekly gain, as a stronger dollar curbed demand for the metal as an alternative investment. Other precious metals dropped.
The dollar gained against the yen as North Korea�s state- run Korean Central News Agency said planned naval exercises by South Korea and the U.S. moved the peninsula �closer to the brink of war.� The greenback rose to a two-month high versus the euro amid concerns Europe�s sovereign-debt burdens are worsening. Gold, which reached a record $1,424.60 an ounce on Nov. 9, usually moves inversely to the U.S. currency.
�Bullion prices have been under pressure as a result of the decline in risk sentiment,� James Moore, an analyst at TheBullionDesk.com in London, said in a report. Still, gold may �remain underpinned by investment bargain hunting as investors look to diversify against the volatile macro-economic and geopolitical background.�
Immediate-delivery bullion lost $15.75, or 1.1 percent, to $1,359.60 an ounce at 11:42 a.m. in London. Prices are up 0.5 percent this week. The metal for February delivery was 1 percent lower at $1,361.40 on the Comex in New York. Floor trading was closed yesterday for Thanksgiving in the U.S. and electronic trades are booked with today�s for settlement purposes.
Bullion fell to $1,366.50 an ounce in the morning �fixing� in London, used by some mining companies to sell output, from $1,373.25 at yesterday�s afternoon fixing.
Irish Bailout
Borrowing costs for the euro region�s most-indebted nations are surging as Ireland�s acceptance of a bailout of its banking industry stokes speculation that other countries will have to seek aid. The Financial Times Deutschland reported that euro- area policy makers are pushing Portugal to seek assistance from a 750 billion-euro ($991 billion) bailout fund. The country isn�t being pressed to use the facility, an official at the office of Prime Minister Jose Socrates said.
Irish Finance Minister Brian Lenihan said yesterday that while the size of a bailout from the European Union and the International Monetary Fund hasn�t yet been determined, an amount of around 85 billion euros �has been mentioned.� The government said this week it will cut spending by about 20 percent and raise taxes over the next four years.
�We are following the euro to a certain extent and the euro is back to its weak point,� said Darren Heathcote, head of trading at Investec Bank (Australia) Ltd. The Korean conflict �is still in the back of people�s minds. There�s a possibility of further conflict and that is helping to support gold.�
�Escalated Confrontation�
President Barack Obama has dispatched an aircraft carrier to take part in military drills in the Yellow Sea in a show of strength after North Korea this week shelled a South Korean island. North Korea warned that any �escalated confrontation� will lead to war, KCNA said in an e-mailed statement.
Explosive shots, coming from the direction of North Korea, were heard on South Korea�s Yeonpyeong Island today, said a spokesman at South Korea�s Joint Chiefs of Staff who declined to be identified, citing military policy. The military is investigating, he said.
Eleven of 15 traders, investors and analysts surveyed by Bloomberg, or 73 percent, said the metal will rise next week. One forecast lower prices and three were neutral.
Silver for immediate delivery in London fell 3.6 percent to $26.5875 an ounce. It reached a 30-year high of $29.36 on Nov. 9 and is up 58 percent this year.
Palladium dropped 4.7 percent to $665.50 an ounce. Platinum was 1.2 percent lower at $1,640.68 an ounce.
GOLD National Leaders Meeting, May 2010
GOLD National Leaders from around the world met in New Orleans, Louisiana, USA, on May 15, 2010. Discussions focused on the planned revision of the GOLD guidelines to be released in 2011, a new slogan for World COPD Day 2010 to focus on spirometry, and dissemination guidelines.
Gold and money
History of gold
From the first discoveries of gold in ancient times, its beauty and the ease with which it could be worked have inspired craftsmen to use it to create ornaments, not just for adornment, but as potent symbols of wealth and power. The first pure gold coins were struck by King Croesus of Lydia (present-day Turkey) during his reign between 560 and 547 BC and gold coins have continued as legal tender since that time.
Mine production
It is known that the Egyptians mined gold before 2000 BC and the first coin containing gold was struck in the eighth century BC.
The best estimates available suggest that the total volume of gold mined over history is approximately 158,000 tonnes, of which around 65% has been mined since 1950. Production has been on a downward trend since 2001, due principally to the reduction in exploration budgets that accompanied the low gold price of the late 1990s and the consequent fall in the number of major new gold discoveries. Independent analysts believe mine output will remain relatively flat for the next few years. For a history of gold mining >>
Gold as a reserve asset
Central banks have been major holders of gold for more than 100 years and are expected to retain large stocks in future. They currently account for about 20% of above-ground stocks. The process of rebalancing reserve portfolios to adjust to changing conditions since the demise of the gold standard has led to a reduction in the amount of gold held by some central banks in the past ten years. This process may continue for some years to come. But the central banks have affirmed that gold will remain an important reserve asset for the foreseeable future and, importantly, since 1999 have accepted that sales be governed by international agreement.
From the first discoveries of gold in ancient times, its beauty and the ease with which it could be worked have inspired craftsmen to use it to create ornaments, not just for adornment, but as potent symbols of wealth and power. The first pure gold coins were struck by King Croesus of Lydia (present-day Turkey) during his reign between 560 and 547 BC and gold coins have continued as legal tender since that time.
Mine production
It is known that the Egyptians mined gold before 2000 BC and the first coin containing gold was struck in the eighth century BC.
The best estimates available suggest that the total volume of gold mined over history is approximately 158,000 tonnes, of which around 65% has been mined since 1950. Production has been on a downward trend since 2001, due principally to the reduction in exploration budgets that accompanied the low gold price of the late 1990s and the consequent fall in the number of major new gold discoveries. Independent analysts believe mine output will remain relatively flat for the next few years. For a history of gold mining >>
Gold as a reserve asset
Central banks have been major holders of gold for more than 100 years and are expected to retain large stocks in future. They currently account for about 20% of above-ground stocks. The process of rebalancing reserve portfolios to adjust to changing conditions since the demise of the gold standard has led to a reduction in the amount of gold held by some central banks in the past ten years. This process may continue for some years to come. But the central banks have affirmed that gold will remain an important reserve asset for the foreseeable future and, importantly, since 1999 have accepted that sales be governed by international agreement.
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