RE: Gold up bigtime tonightMonday, October 25, 2004 9:04:54 AM
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DJ Asia Precious Metals: Gold Surges On Plunging USD
SYDNEY (Dow Jones)--Heavy speculative and technical buying Monday from Asian
and overseas players, triggered by a faltering U.S. dollar, pushed spot gold to
its highest level in nearly seven months in Asia.
The intraday high bid of US$429.50/oz marked the yellow metal's highest price
since April 2, when it last exceeded US$430/oz.
At 0847 GMT, spot gold was quoted at US$428.88/oz, up $4.43 on Friday's late
New York price.
Taking its cue from the foreign exchange market, gold surged moments after
the start of trading in Sydney as preplaced stop-buys and other program orders
were triggered.
Global funds, technical program traders and Japanese dealers were all among
the buyers, according to various traders in the region.
But despite the heady gains, they all described the market as "choppy"
throughout the day, with many players content to take profits at various
levels.
Persistent offering above the market was credited with keeping gold in check
and preventing a breach of initial resistance at US$430/oz.
"There seems to be long liquidation waiting ahead of $430/oz," said a Tokyo
trader with a major Japanese dealer.
(Prices in dollars/troy ounce, except Tocom in yen/gram.)
Monday Change On Friday Monday Leading
0847 GMT New York Late HK Range Tocom
Gold 428.88 up 4.43 425.00 425.50-429.50 1,474
Silver 7.46 up 0.16 7.31 7.33-7.49 25.34
Plat. 856.00 up 12.50 854.50 846.00-857.50 2,896
Pall. 217.00 up 1.50 216.50 214.00-217.50 741
But with the U.S. dollar falling to an eight-month low against the euro
Monday and oil prices remaining at record high levels, the consensus view among
traders is that gold will indeed best US$430 in the short to medium term.
A move above US$432/oz, where the yellow metal stalled in early April, would
yield a 16-year high.
"(Gold) is still relying largely on the euro," explained Gordon Cheung,
director of precious metals with Mitsui Bussan in Hong Kong. But there is
"absolutely no question that the base has formed pretty well here between
US$422/oz and US$425," he added.
Cheung said gold would likely consolidate around that base before eventually
targeting US$435/oz and US$440.
"US$430/oz is an easy target to break, and...from there you may see US$450 in
the coming months," added Alastair McIntyre, director of precious metals with
ScotiaMocatta in Hong Kong.
The gains also extended to the rest of the precious metals complex, with both
silver and platinum making strong moves Monday in Asia.
Buoyed in its own right by heavy speculative buying, spot silver rose as high
as US$7.49/oz and was last quoted at US$7.46, up 16 cents since Friday's Comex
close.
But analyst James Moore of TheBullionDesk said silver may peak before gold
does.
"As with gold, the metal will continue to find upward momentum from the
pressure on the dollar," Moore said. "However, with the level of speculative
interest seen in the metal over the past few weeks and the recent correction in
base metal prices, I think silver may run out of steam a little sooner than
gold," he added.
Spot platinum added US$12.50/oz in Asia to reach US$856, but remained well
within its recent US$820-US$880 range.
Tokyo Commodity Exchange precious metals futures mostly rose Monday, thanks
to the spot price gains, but were held in check by a much stronger yen.
At 0847 GMT, the U.S. dollar was trading at a six-month low of Y106.35.
The most active August 2005 Tocom gold contract gained only Y8 per gram to
close at Y1,474/gram on aggregate volume across all maturities of 70,546.
The lead silver contract added Y0.24/gram to close at Y25.24 on aggregate
volume of 3,956 lots.
The benchmark August 2005 platinum contract rose Y3/gram to finish at Y2,896.
A total of 33,552 lots were traded.
Finally, the August 2005 palladium contract fell a modest Y7/gram to close at
Y741. A total of just 554 lots were traded.
By Nicholas Sinclair, Dow Jones Newswires; 612-8235-2957;
nicholas.sinclair@dowjones.com