|
Gold rebounds from two month low { August 2006 } Original Source Link: (May no longer be active)
http://www.bloomberg.com/apps/news?pid=20602013&sid=awiBwLuBRsnA&refer=commodity_futureshttp://www.bloomberg.com/apps/news?pid=20602013&sid=awiBwLuBRsnA&refer=commodity_futures
Gold Rebounds From Two-Month Low on Bets Tumble Was Overdone
By Pham-Duy Nguyen
Sept. 12 (Bloomberg) -- Gold in New York rebounded from the lowest in two months as some investors bet the slide of almost $50 an ounce in the past four sessions was overdone.
``Speculators are buying gold today,'' said Michael Sander, a commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California. ``There are people who think it's a great buying opportunity.''
Gold closed below $600 an ounce yesterday for the first time since June 29. The metal is down 18 percent from a 26-year high of $732 in mid-May. Gold's seven-day relative-strength index fell below 30 for a second day, a signal prices may rise.
Gold futures for December delivery rose $2.40, or 0.4 percent, to $599.70 an ounce at 11:08 a.m. on the Comex division of the New York Mercantile Exchange. The metal dropped 7.7 percent in the past four sessions.
A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
The seven-day relative-strength index, a gauge of the momentum for gains or losses, fell to 24.8 yesterday, the lowest since June 15. It's at 29.3 today. A drop below 30 indicates prices are poised to rise.
Jewelers, who accounted for 73 percent of purchases last year, may be stocking up for the year-end holiday season.
``Jewelers are taking advantage of the lower prices,'' said Tobias Merath, an analyst with Credit Suisse Group in Zurich.
Global Demand
Global gold demand fell 16 percent in the second quarter, the third straight quarterly decline, as higher prices deterred jewelers, the biggest buyers, according to the producer-funded World Gold Council.
Gold still may resume its slide, some analysts said. The metal closed under the 200-day moving average yesterday, a signal to traders who look at historical charts that the bullish trend may be ending.
``It has broken the long-term trend,'' said Sander of Altavest. ``A close down at those levels was very negative. That's an extremely bearish sign.''
A drop in oil prices and other commodities reduced gold's appeal as an inflation hedge.
The Reuters-Jefferies CRB Index of 19 commodities yesterday fell 6.66 or 2.1 percent to 313.73, after touching 313.54, the lowest since Nov. 30. Crude oil fell for a seventh straight session, the longest decline since October 2003.
``By the end of the year, I could see another $25 to $50 downside'' for gold, said Alan Mandel, a trader at Alan M. Trading in New York. ``Crude oil and other commodities are dropping, so I don't see the inflation scare.''
Some investors buy gold when consumer prices climb. Gold futures reached a record $873 an ounce in January 1980 after oil costs doubled in a year, sparking a surge in the inflation rate.
Gold ``is blowing off considerable steam after climbing too high,'' Mandel said.
Last Updated: September 12, 2006 11:10 EDT
|
|
