Gold hovers near 1-1/2-week top after Portugal rating cut

 SINGAPORE, July 6 (Reuters) - Spot gold on Wednesday hovered
near a 1-1/2-week high hit in the previous session, supported by
renewed worries about the euro zone's debt problem after Moody's
downgraded Portugal's credit rating to junk.	

 FUNDAMENTALS	

 * Spot gold edged down 0.1 percent to $1,513.56 an
ounce by 0033 GMT, after rising more than 1 percent in the
previous session.	

 * U.S. gold GCcv1 was up nearly 0.1 percent to $1,514.10.	

 * Moody's on Tuesday cut Portugal's credit rating to junk
and warned the country may need a second round of rescue funds,
pushing gold to a 1-1/2-week high of $1,516.49. 	

 * The latest U.S. data showed new factory orders bounced
back in May, pointing to underlying strength in manufacturing as
demand for transportation equipment and a range of other
products rose. 	

 * Investors are watching for any potential supply disruption
as a result of strikes in South Africa and Indonesia.	

 * The National Union of Mineworkers in South Africa, one of
the world's top gold producers, said it was readying for strike
action over wages against the country's main gold miners
including Gold Fields , Harmony and AngloGold
Ashanti . 	

 * in Indonesia, mining operations at Freeport-McMoran Copper
&  Gold's mine have been significantly curtailed by a
strike by about 8,000 workers, union workers said.

 MARKET NEWS	

 * U.S. stocks ended a thinly traded session mostly flat on
Tuesday as investors paused after last week's surge, though
continually light volume suggested the market could encounter
more choppy trading. 	

 * The euro stayed on the back foot in Asia on Wednesday,
having suffered a steep fall against the Swiss franc and the  

Gold climbs 1 pct as risk aversion picks up

* Gold breaks out of earlier range on  China, euro zone fears

* Metal shrugs off impact of firmer dollar

* Asian buying picks up after prices dip below $1,500/oz

By Jan Harvey

LONDON, July 5 (Reuters) - Gold prices rose more than 1 percent on Tuesday as risk aversion returned to the financial  markets, stoked by concerns over the outlook for the Chinese economy and renewed worries about the Greek debt crisis.

Spot gold was bid at $1,508.36 an ounce at 1334 GMT, against $1,495.54 late in New York on Monday. U.S. gold  futures  for August delivery GCv1 rose $26.30 an ounce to $1,508.90.

Media reports about a possible rate rise in China and a Moody's report saying the scale of problem loans at local governments there may be much bigger than previously thought dented risk appetite, which had returned to the markets last week after  Greece  approved austerity measures.

" Certainly the Chinese stories this morning have helped (gold)," said Credit Suisse analyst Tom Kendall.

" We have seen a bit of buying coming back in from some of the institutional names that have been absent for a while, and positioning in gold is a lot less from shorter-term players than it has been."

Treasury futures rebounded on Tuesday, paring some of the heavy losses seen last week, as a warning over the exposure of Chinese banks and continuing uncertainty in the  euro zone  boosted safe-haven assets.

Meanwhile, the premium investors demand to hold Spanish and Italian debt crept up and the cost of insuring peripheral debt against default rose on weak economic data and persistent worries over the impact of a Greek debt rollover.

Concern over mounting debt levels in euro zone economies like Greece,  Ireland  and Portugal were a key factor driving gold to record highs above $1,575 an ounce in May.

Standard & Poor's warned on Monday it would treat a rollover of privately held Greek debt now being discussed as a selective default, while below-forecast euro zone PMI data boosted risk-averse sentiment on Tuesday.

The dollar firmed against the euro as deteriorating euro zone data and concern over China's health pushed investors towards  currencies  perceived to offer safety.

Usually this would weigh on gold, but its value as a haven from risk is outweighing the effect of the stronger U.S. unit.

ASIAN GOLD BUYING PICKS UP

Asian gold demand firmed after prices slid below $1,500 an ounce, with buying picking up inThailand  after Sunday's election and premiums rising in Singapore. Indian and Chinese buyers -- the world's top gold consumers -- were also seen in the market, though seasonal factors muted buying.

With physical demand set to remain lacklustre during the seasonally quiet summer months, and investors still digesting moves to shore up the troubled euro zone and the end of U.S. monetary easing, gold is set to stay in consolidation mode.

" Gold will need to search for new sources of inspiration to move higher, in our view, as the markets contemplate a world without quantitative easing," said Deutsche Bank in a note.

" However, we expect a weak U.S. dollar, negative real interest rates and ongoing central bank diversification into gold will sustain a constructive outlook for the sector."

Data released by the International Monetary Fund showed on Tuesday that Greece and Tajikistan marginally increased their gold reserves by 0.03 tonnes and 0.05 tonnes respectively in May, whileMexico  sold 0.19 tonnes.

Among other precious metals, silver was bid at $34.86 an ounce against $34.08, spot platinum was bid at $1,727.49 an ounce versus $1,718.55, and spot palladium was at $767.50 an ounce against $757.45.

The world's biggest carmaker, Toyota , said its Chinese auto sales fell by 2.4 percent in June from a year earlier. General Motors and its China joint ventures saw a 9.9 percent rise in sales in the same period, it said.

The health of the car sector is a key driver for platinum group metals, which are used in autocatalyst manufacturing.

" The PGMs did well to virtually shrug off poorer-than-expected June U.S. auto sales of 11.4 million units, well below consensus of 11.9 million units and lower than May's 11.8 million," said UBS in a note." The decline was driven by continued inventory shortages and a recently implemented California sales tax break, effective July 1. Our auto analysts deem the June result to be a temporary effect of Japan's earthquake and note that overall fundamentals remain strong for the full year."

 

 

 

 

 

 

 

 

 

 

 

 

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 * Thailand buys physical gold on strong baht after election

 * Spot gold seen neutral - technicals [ID:ID:nL3E7I503S]

 * Coming up: U.S. May factory orders  1400 GMT

 

 By Rujun Shen	

 SINGAPORE, July 5 (Reuters) - Spot gold held steady on
Tuesday, after a warning by ratings agency Standard &  Poor's
that it would treat plans for a rollover of privately-held Greek
debt as a selective default, underpinning safe haven demand for
bullion. 	

 The technical picture suggested lack of momentum in bullion,
although physical buying by Asian countries including Thailand
and Indonesia helped support prices.	

 Rating agency S& P warned Greece would likely be in default
if it follows a debt rollover plan pushed by French banks,
tempering risk appetite and driving some investors to seek safe
haven in gold. 	

 Spot gold inched up 0.1 percent to $1,497.56 an ounce
by 0354 GMT.	

 " We have seen a lot of interest below $1,500, but it is not
enough to bring prices back above the level,"  said Dominic
Schnider, an analyst at UBS Wealth Management.	

 Schnider said that gold's short-term technical picture
looked sluggish, after prices broke an uptrend from 2008.	

 " A lot of people have cleared positions after the uptrend
was broken and we are still in a consolidation phase. Gold could
move towards $1,445 from a technical perspective,"  he said.	

 In the short term, gold's technical signals were seen
neutral after prices failed to drop in the previous session, and
prices were expected to range between $1,479 and $1,514, said
Reuters market analyst Wang Tao. 	

 Since June 27, spot gold has traded in a range of $1,478.01
to $1,513.71 an ounce.	
  	

 THAIS BUY ON STRONG BAHT, INDONESIA PREPARES FOR RAMADAN	

 The lower prices have attracted buying on the physical
market from Thailand and Indonesia, dealers in Singapore said.	

 " The election strengthened the baht, encouraging purchase of
gold from jewelers and bullion traders alike in Thailand,"  said
a dealer.	

 The Thai currency rose more than 1 percent against
the dollar on Monday as Sunday's general election eased worries
about the country's political uncertainty. 	

 In Indonesia, jewellers are stocking up gold ahead of the
Ramadan which falls in August this year, during which consumers
traditionally purchase gold jewellery.	

 Interest from India, the world's top gold consumer, remained
muted as the country goes through the monsoon season when
farmers are busy sowing and gold sales is slow.	

 Investors are eyeing a spate of data out of the United
States later this week, including the key non-farm payrolls data  

 * Gold market thin on U.S. holiday

 * Gold's rebound to end below $1,500 - technicals
 

By Rujun Shen	

SINGAPORE, July 4 (Reuters) - Gold regained some lost
territory from the previous session on Monday supported by a
weaker dollar, but analysts said that easing concern about
Greece's debt crisis has diminished gold's appeal as a safe
haven in the short term.	

Euro zone finance ministers have approved a 12 billion euro
instalment of Greece's bailout, sending the euro to a one-month
high against the dollar. The dollar edged down 0.3
percent against a basket of currencies.  	

Gold dipped below the key support level of $1,500 in the
last session, and faces strong headwinds in the short term,
traders and analysts said.	

" After Greece passed the austerity measures, market
participants will need to find another reason to buy into gold," 
said Ong Yi Ling, an analyst at Phillip Futures.	

" But right now it's hard to find a catalyst for gold prices
to push higher." 	

The price outlook for the rest of the year however remains
bullish, supported by the wobbly economic recovery in the United
States and high inflation in major fast-growing economies like
China and India, analysts said.	

 Spot gold gained half a percent to $1,492.60 an ounce
by 0338 GMT, regaining some lost ground from the previous
session.	

 U.S. gold GCcv1 rose 0.8 percent to $1,493.90 an ounce.	

 Technical analysis also pointed at lack of momentum,
suggesting that gold may end its weak rebound below $1,500 and
resume a preceding fall towards $1,472, said Wang Tao, Reuters
market analyst. 	

 " There is small buying interest in Asia, but nothing
game-changing,"  said a Hong Kong-based dealer, " The gold market
will be taking cues from the euro and oil, which are giving some
upside support to bullion." 	

 Gold is likely to be rangebound between $1,470 and $1,520 in
the next few days, he added.	

 Managed money sharply cut their bullish bets in COMEX gold
futures and options, as bullion prices tumbled, futures
regulator Commodity Futures Trading Commission data showed
Friday. 	

 Holdings in the SPDR Gold Trust , the world's largest
gold-backed exchange-traded fund, dropped to two-week low of
1,205.809 tonnes by July 1.	

 Activity was thin as the U.S. financial markets are closed
for a public holiday on Monday.	

 Supporting market sentiment, about 8,000 workers at
Freeport-McMoran Copper &  Gold Inc's Indonesian unit
started a seven-day strike, although Freeport said the strike
would not impact production at Grasberg mine, which it claims to  

With risk appetite returning to markets in full force this week, significant gains in equities coupled with the end of the dollar diluting Fed easing policies are likely to see gold remain on the defensive. This week witnessed gold fall 1.17% on the back of the 2.36% drop seen the previous week. The yellow metal now approaches key support at the 100-day moving average at $1475.

Gold’s inability to climb amid weakness in the dollar may be a pre-curser to further losses moving forward. The Dow Jones FXCM Dollar Index (Ticker:  USDollar) declined more than 1.7% this week as improving risk appetite saw traders jettison the greenback for higher-yielding growth-linked assets. Yet the losses in the dollar and advances in the S& P did not translate into gains for gold, suggesting that there may be a fundamental shift away from the metal as an alternate investment. The breakdown of these key correlations continues to suggest gold me be in a technical correction as traders continue seek riskier assets.

With central banks like the ECB now gearing up to raise interest rates in an attempt to combat higher food and energy costs, the long gold anti-inflationary play will begin to lose its luster as sluggish wage growth and higher rates give rise to deflationary concerns. As appetite continues to pick up, gold becomes less of an attractive asset for traders seeking to maximize exposure to higher yielding investments.

However in light of the recent rally seen in equities, one would expect some consolidation ahead of next week’s jam packed global economic docket with rate decisions from the ECB, BOE, and the RBA on tap. The week closes with Friday’s highly anticipated non-farm payroll figures with estimates calling for a read of just 100K after last month’s dismal print of just 54K. If data next week upsets the recent shift in risk sentiment, gold could pair some of the losses seen this week as traders flock to haven assets. However, with central banks moving to curb inflation and interest rates seen on the rise, the metal should remain well anchored with risk weighted to the downside.

 

A Fibonacci extension taken from the all-time highs on May 2nd  and the June 22nd  peak reveals downside targets below the 100-day moving average at 76.4% extension at 1468, followed by the convergence of the 100% extension and trendline support dating back to July 28th  2010 at $1440. If the 100-day moving average holds, a rebound sees topside targets at the 50% Fib extension just shy of the $1500 level, backed by $1530.- MB

 

 

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Closing Gold & Silver Market Report – 7/01/2011

 By Chikako Mogi	

 TOKYO, June 23 (Reuters) - Gold fell on Thursday, snapping a
four-day winning streak, as the dollar gained after the Federal
Reserve gave no hint of further stimulus, but gold priced in
sterling hit a record high as the British currency sagged on
views of more easing.	

 Traders said gold would be range-bound for the time being
until new developments unfold on the prospects for U.S. monetary
policy and the sovereign debt problems in the euro zone, the two
main themes that have so far dictated market direction.	

 " The market will likely remain in narrow ranges around
current levels with the topside capped until fresh factors
emerge to prompt funds to aggressively want to buy gold,"  said 	
Yuichi Ikemizu, branch manager for Standard Bank in Tokyo.	

 Spot gold had eased 0.2 percent from late New York
levels to $1,546 an ounce by 0242 GMT, after peaking at
$1,557.75 on Wednesday, its loftiest since hitting a record high
above $1,575 on May 2.	

 " Investors and end-users are not interested in buying gold 
unless the price falls below $1,530, while there is little
incentive to boost prices above $1,550,"  Ikemizu said.	

 The main focus for the market remains interest rates and
credit woes, and there were no surprises from the Federal
Reserve saying it would keep to its current easy monetary
stance, while Greece has averted an imminent crisis and the
market is now waiting to see whether European leaders can come
up with convincing plan to help Athens avoid a debt default.

 The Fed on Wednesday cut its forecasts for U.S. economic
growth, but offered no hint of further monetary support, saying
the recovery should gradually pick up heading into 2012.

 Fed Chairman Ben Bernanke said the vow to keep interest
rates exceptionally low is intended to suggest the Fed is at
least two or three meetings away from a move, but that the time
period could be " significantly longer"  depending on the economy.	

 The outcome of the Fed's two-day policy meeting on Wednesday
helped the dollar index , which tracks its performance
against a basket of major currencies, bounce off a one-week low
to last stand at 75.104.	

 In contrast, minutes of the Bank of England's June meeting
released on Wednesday signalled British interest rates were
unlikely to rise from their record low 0.5 percent this year and
the BoE could even opt for more quantitative easing.	

 This helped push sterling priced-gold to a fresh
lifetime high of 969.66 pounds per ounce as the British currency
sagged to three-month lows in Asia.	

 Reflecting lack of incentives, holdings of the largest
silver-backed exchange-traded-fund (ETF), New York's iShares
Silver Trust gained 0.25 percent from Tuesday to
Wednesday, while, the largest gold-backed ETF, New York's SPDR
Gold Trust remained unchanged for the same period.
 	

 Spot silver eased 0.4 percent to $36.18 an ounce.	

 Brent crude fell more than $1 a barrel, in line with a
decline in U.S. oil futures, as a 6.8-magnitude earthquake shook
northeast Japan and markets reacted to comments by Bernanke.
 	

 The Nikkei stock average edged lower on Thursday as
gains in automakers led by Nissan Motor Co were offset
by weakness in other shares. 	  

Forex.com has reportedly warned clients  they will no longer be allowed to trade over-the-counter precious

metals, including gold and silver under Dodd-Frank regulations taking effect next month.

 

The e-mail was reported by  ZeroHedge  over the weekend and picked up by  LeapRate.com.

 

“As a result of the Dodd-Frank Act enacted by US Congress, a new regulation prohibiting US

residents from trading over the counter precious metals, including gold and silver, will go into effect

on Friday, July 15, 2011,” Forex.com wrote to clients.

LeapRate notes that:

 

The Forex.com message apparently stems from Forex.com’s interpretation of some of the Dodd-

Frank rules which prohibit “…a transaction in any commodity with a person that is not an eligible

contract participant or an eligible commercial entity, on a leveraged or margined basis.”

Nevertheless, some observers contend that there is nothing in Dodd-Frank – or in Commodity Futures Trading

Commission rules under consideration — that prohibits retail investors from investing in gold or silver.

 

“It’s a bit of an overreaction on Forex.com’s part,” said Terry Hanlon President of Dillon Gage Metals in Dallas

Texas, a brokerage firm that specializes in metals.

 

Tom Winmill, President and Portfolio Manager of the  Midas funds  MIDSX, points out that Dodd-Frank provides

an exemption for retail transactions in gold or silver if it is delivered within 28 days.

 

“Dodd-Frank  intended to give the CFTC more authority to regulate futures transactions, so if it doesn’t look like a

futures transaction – in other words, if it is delivered within 28 days – the CFTC would let it go,” Winmill said.

 

Dillon’s Hanlon said Dodd-Frank regulations seek to impose new restrictions on leveraged gold and silver

transactions as well as derivatives trades that fund managers typically make.

 

“The investor that wants to buy gold will not be affected by this at all,” he said.

 

The CFTC didn’t return calls seeking comment.

 

(Editor’s note: This post has been updated with reaction to the Forex.com move.    Ron Orol contributed to this

piece.)