Gold keeps Climbing
Good thing I own lots of gold stocks. It could be a very good week.
Euro pumps gold through $360/oz
By: Daniel Thole
Posted: 2003/05/19 Mon 16:11 ZE2 | © Mineweb 1997-2003
JOHANNESBURG - Gold continued its deliberate march upwards today,
pushing through the $360/oz barrier as the euro surged ahead against the
dollar and as investors cowered in the wake of fresh terror attacks.
Driven by what one South African bullion trader called a “horrific weekend” of
bombings in Morocco and Israel, gold broke the key $360/oz technical level,
supported by a strong euro move to $1,17 against the dollar this morning.
A South African currency trader at a major local bank said the euro was now
targeting $1,20, in the very near future, which would have been unthinkable
six months ago. “We could see the euro at $1,20 in the next three days,” the
trader said.
Currency traders said global concerns about escalating terror attacks had
teamed with new developments around stability in North Korea, Indonesia
and travel advisories on Kenya, to create widespread uncertainty which was
feeding gold’s strength.
Undeterred by the attacks, which currency traders said would ordinarily have
supported the dollar, the euro surged through $1,17 in early Monday trade on
the back of a US Treasury statement seen as supporting a weaker dollar.
The rand weakened slightly against the dollar in the wake of the euro’s gains,
and was last at R7,78. It gave up more ground to the euro, and was last at
R9,05.
Snow job
US Treasury Secretary John Snow’s suggestion that he won’t intervene to
halt the dollar’s slide –the greenback has lost 22% in the last year - fed into
euro strength as traders wound up their short euro positions and took up long
positions on the single currency.
Snow’s statement, which is consistent with recent US policy statements, hit
the dollar just after its release as the Asian trading day began today.
“The guys who are long euro would prefer that (the Euro) moved up gradually,
which usually means that it’s more sustainable,” a local currency trader said.
Rise is inevitable
The same holds for bullion. A Johannesburg based gold trader said the good
news for gold was that it was ticking up gradually, a trading pattern that
means the metal is more likely to sustain its current gains than if it had
surged up to higher levels.
“There will be some profit taking, that is inevitable, but investors are finding it
hard to establish levels which levels to sell at,” the trader said.
He said that profit taking was normal as the metal went through major levels
like $360/oz, but the pull-backs to lower levels are not likely to halt the
metals’ upward climb. “Gold is holding onto is gains, and it looks like it will
just keep chiselling upwards,” he said.
He said gold needed to hold onto its gains above $350/oz to make a bid for
sustained strength. But the bad news for gold is that traders said producer
buy-backs that had underpinned a lot of gold’s strength over the last few
months, would not be there indefinitely. He said even if the market slipped to
lower levels, where hedge buybacks are more efficient for companies.
“I think we have seen most of the buy backs come through the market
already, and they seem to have run out of steam,” a Johannesburg-based
trader said.
Traders said they were also concerned that Asian demand for gold wou