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Central banks count the cost of holding lots of declining dollars
By Myra P. Saefong
CBS.MarketWatch.com
Monday, January 10, 2005
http://cbs.marketwatch.com/news/story.asp?guid=%7B0335A88D%2D73A3%
2D4FBF%2D8DA0%2D8AD541FA8AF7%7D&siteid=mktw
SAN FRANCISCO -- Gold futures closed narrowly
higher Monday, after suffering a decline of nearly
$19 an ounce last week.
"Gold seems to be finding a small foothold here after
the large selloff on relative dollar strength," said
Kevin Kerr, president of Kerr Trading International.
All tolled, gold prices dropped by 4.3 percent last
week.
Gold for February delivery closed at $419.701 an
ounce on the New York Mercantile Exchange, up
20 cents for the session after climbing to a high
of $421.30 earlier.
"The momentum just isn't with the gold right now,
as the diehard dollar bulls latch onto whatever good
news they can," said Kerr.
"The dollar could fall out of bed any time soon and
could catch a lot of traders off guard, sending the
yellow metal back up to respectable levels as we
head further down the strip like the April and June
contracts," he said.
Overall, gold's value "seems to be getting oversold
and we may see a rapid snapback to higher levels,"
he said, adding that the metals market is "already
seeing bargain hunters dip their toes in the water
realizing that such a steep correction is overdone."
Prices should continue to trade in the $418 to $425
area until foreign exchange traders decide on the
next direction for the dollar, said James Moore, an
analyst at TheBullionDesk.com in London.
In the short term, the precious metal is "still open
to further downside pressure," but the longer-term
outlook is "still bullish with last week's correction
likely to prove healthy, enabling the metal to extend
above last year's $458 high," he said in a note to
clients.
Other metals futures in New York ended the session
higher Monday, with the exception of copper, whose
March contract closed little changed at $1.3695 a
pound, down 0.05 cent.
March silver rose 0.2 cent to close at $6.448 an
ounce; March palladium climbed $7.60 to end at
$191.60 an ounce; and April platinum added $6.20
to close at $846.90 an ounce.
Tracking inventories, copper supplies were unchanged
at 48,455 short tons as of late Friday, according to
Nymex. Silver stocks were down 449,670 at 102.9
million troy ounces, while gold inventories totaled
5.87 million troy ounces, unchanged from the previous
session.
On the equities side, mining shares closed higher for
a second session, a reversal following last week's 6
percent decline in three key indexes.
A 2.8 percent rally in shares of Placer Dome Gold
led the Philadelphia Gold and Silver Index higher by
0.8 percent to close at 94.15. The CBOE Gold Index
closed at 83.79, up 1.1 percent, while the Amex Gold
Bugs Index climbed to 204.75, up 1.2 percent for the
session.
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