Gold Trading

Update

2007-05-31T07:04:00.000-07:00

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2007-04-30T16:39:00.000-07:00

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2007-04-19T09:45:00.000-07:00

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Gold Update

2007-04-08T21:19:00.000-07:00

Gold continues to extend gains following the fact that channel support held a few weeks back.

The metal is likely to maintain a positive outlook and continued gains would open 677.60, Feb 28 high and if this level gives way, would open 689.00, the Feb 27 high.

Note that the channel resistance is located at 706.08 while support is at 642.39 and these two points mark the key medium-term boundaries.

Initial support is at 655.50, and should hold near-term if the current positive outlook is to be maintained.

Momentum has improved and continues to offer a positive backdrop.

Gold Update

2007-04-05T01:50:00.000-07:00

Gold Update
1st Support lies at 668.64
2nd Support lies at 661.13

1st Resistance lies at 677.50
2nd Resistance lies at 687.35

Market Update

2007-04-04T00:04:00.000-07:00

RBA held rates steady today, but a chance of a future rate hike is still very likely.

The market is currently pricing 12-13 bp for the May meeting.

CPI reading in late April will be a key oindicator to the RBA.

BoJ's Mutu hit wires in Asia saying that rate adjustments will be gradual and prolonging low rates may hamper growth. Standard comments but USDJPY remain bid. We look for a break in Europe of 119.00 to send the pair for test of the 120.00 level.

European stocks back on track and is bound to test the highs from February, presently at 7,040 in DAX.

Gold Futures Update

2007-04-03T06:15:00.001-07:00

Comex gold has a softer tone in the early going, dragged down in part by a decline in crude oil, There are thoughts that the Iran-U.K. standoff might be resolved.

June gold is down $2.30 to $669.20.
The area around $663 will be key support.

Precious metals update

2007-04-02T17:43:00.001-07:00

Gold manage to hold Monday's dips near 655.50, Mar 23 low and stays positive for extension on the back of double bottom reversal off the trend-line support.

Latest bounce off 655.50 will pivot up-leg over 669.35, Mar 28 high ahead of resistance zone near 675.78, fib.764 level and 677.60, Feb 28 high.

Sustained break there projects 689.00, Feb 27 trend top.

Violation of 655.00 risks 644.20 Mar 15 low.

Silver turns cautious as it approaches key resistance at 13.690, former support level.

Yesterday's dips contained at 13.007 and the near term up-leg off 12.605 Mar 14 low stays intact.

Meanwhile, expect basing around 13.007 and 12.840.

Losing 12.840, however, sours for setback to 12.605 ahead of 12.420.

Upside breach of 13.690 will instead accelerate gains towards 13.740, Mar 2 high ahead of 14.000, preceding extension to 14.335, Mar 1 high.

Precious Metals Update

2007-04-01T17:31:00.000-07:00

Gold manage to contain recent dips above 655.50, Mar 23 low and gaining momentum to extend up-leg on the back of double bottom reversal off the trend-line support.

Latest rebound above 655.50 will pivot next up-leg over 669.35, Mar 28 high ahead of resistance zone near 675.78, fib.764 level and 677.60, Feb 28 high.

Sustained break there will accelerate gains towards 689.00, Feb 27 trend top.

Silver remains firm in the near term on rebound from 12.605 Mar 14 low.

However, be cautious as it approaches key resistance level at 13.690, former support level.

Any pullback from there will test support zone near 13.155 and 13.000.

A break of 13.690, however, bodes well for firmer gains towards 13.740, Mar 2 high ahead of 14.000, preceding extension to 14.335, Mar 1 high.

Precious Metals Update

2007-03-28T17:13:00.000-07:00

Gold retains positive tone and aims to retrace the pullback from 689.00, Feb 27 high, on the back of double bottom reversal off the trend-line support.

Toppish daily indicators, however, warn of corrective dips which should hold at 655.50, Mar 23 low.

Rebound from there will resume up-leg over 669.35 ahead of 675.78, fib.764 level.

Sustained break there bodes well for 677.60, Feb 28 high before extending bull leg to 689.00, Feb 27 trend top.

Silver respite off 12.605 Mar 14 low looks over-extended as it approaches key resistance level at 13.690, former support level.

Expect pullback from there which will test support zone near 13.155 and 13.000.

A violation of 12.605, however, risks 12.420 Mar 5 low, ahead of setback towards 12.109, 50% of 9.470 to 14.748 advance.

Platinum bullish tone remains largely intact and lurking for further gains since reversing off 1161.0 and 1170.5, Mar 5/Mar 6 lows.

But as the momentum indicators gets toppish, expect corrective pullback testing support zone near 1219.0, Mar 19 low and 1202.5, Mar 15 low.

Possible bounce from there will ignite bull trend resumption towards 1255.5, Feb 28 top ahead of 61.8% retracement level at 1285.5.

Iran Update

2007-03-28T05:53:00.001-07:00

Iranian Arabic TV channel reportedly says they are to air footage of British sailors held in Iran.

Iran Update

2007-03-28T05:52:00.000-07:00

CNN Turk quotes Iran Foreign minister saying UK woman sailor to be freed today or tomorrow.

data out

2007-03-28T05:29:00.000-07:00

durable goods order out at 2.5% vs 3.5% expected
durables ex transportation out -0.1% vs 1.8% expected

Date Coming out - US Durables

2007-03-28T05:28:00.000-07:00

US Durables coming out at 12:30 GMT
Expected 3.5% while the core is expected at 1.8%

Precious Metals Futures Update

2007-03-28T04:10:00.000-07:00

Gold helped higher yesterday by firmer oil prices, geopolitical tensions and a softer USD.

Technically moves within narrow range 655-668, but looks strong with room to the upside.

We need a firm break above 668.00 where a new wave of buyers will step in to target 680.00 and 690.00 in the near term.

We remain within the upward channel, with channel resistance coming in at 700-710.00.

If Gold fails to take out shortly the 668/670 resistance, look for some short term retracement towards 660.00 area.

Energy Futures Update

2007-03-28T04:09:00.000-07:00

WTI Crude printed 68.09 high in after hours trading, on concerns about escalating tensions between US/UK and Iran.

Rumors of an actual attack led to this big spike, and really stress the danger of being short crude with the Iran dispute luring.

The capture of 15 British soldiers by armed Iranian forces, outline the latest development of the situation.

Traders are keyed up for new bullish action on strikes against Iran.

US inventories will further increase volatility today, as traders remain nervous - and will be watching the screens at 16:30 CET. Expected DOE: Crude 2025K exp; Gasoline -2050K exp; Distillate -1500K exp; Refinery 0.50% exp.

Iran Update

2007-03-27T19:33:00.000-07:00

An article claims sourced from Russian military sources, says that US Forces will plan a sneak attack on Iran.
Attack will commence on the first week of April, specifically on April 6, the opening of Easter weekend. Further, cites that US will launch air attack with the plan to annihilating Irans capacity for military resistance, the centers, and key economic assets.

Precious Metals update

2007-03-27T17:10:00.000-07:00

Gold is gaining momentum to edge higher on the back of double bottom reversal off the trend-line support.

Retracing the pullback from 689.00, Feb 27 high, expect further gains over 668.90 ahead of 675.78, fib.764 level.

Sustained break there bodes well for 677.60, Feb 28 high before extending bull leg to 689.00, Feb 27 trend top.

Support zone at 658.25 and 655.50. Under 652.40 risks deeper fall to trend-line support levels near 643.53 and 637.99.

Silver is likely to continue near term gains on respite off 12.605 Mar 14 low which keep the bears at bay for now.

However, further gains are likely to face tough resistance at 13.690, former support level.

Meanwhile, support zone is located at 13.155 Mar 20 low and a violation of 12.605 risks 12.420 Mar 5 low, ahead of 12.109, 50% of 9.470 to 14.748 advance.

Crude Oil Update

2007-03-27T14:54:00.000-07:00

Curde oil went up to $69. There has been rumours out of an Iran strike on a US ship, which was later denied by the White House. Though the rumour appears to be false, military presence is at its strongest level in the Gulf region since 2003, leaving the potential for further incident very high. Oil should remain bid

Precious Metals Futures Update

2007-03-27T04:35:00.000-07:00

Gold had a good recovery yesterday gaining back all losses from Friday, looking at April contracts market recovered all the way from a 657,50 area back to a 666,50 high tracking the rallying oil market.
Momentum seems to slow down in front of tomorrows U.S oil Inventories and resting EURUSD ccy pair.

A break of the current resistance 667,65 indicates much higher levels up at the $680/oz.

Tomorrow will be a key day where both Oil inventories and US Durable goods data could be a vitamin injection pressing the Gold through the resistance.

Copper is extending its rally started in early February and yesterday pressed back up to thew old range c310 - 350/Lbs printing a 314,75 high Supplies is running short globally as we enter the high peak season of construction.

We fancy picking up May Copper on dips towards 310- 308.50/Lbs area targeting 325 next week.

Energy Futures Update

2007-03-27T04:33:00.001-07:00

Oil finally incorporated the Geopolitical tensions in the ongoing Iran - UK conflict and traded all the way up to main resistance areas arr $63,30/bbl where it finally ran out of steam falling back towards the short term 62,50 support ahead of tomorrows U.S DOE inventory numbers which are expected to come out mixed.

A clear break of 63,75 would bring back oil to December levels around 66,40.

If tomorrows numbers presents a build up especially focusing on the Gasoline, market can see a set back to supports around the $61,20/bbl mark

Forex Europe Update - USD

2007-03-27T03:51:00.000-07:00

The US dollar was steady in tight ranges overnight in Asia, EURUSD traded in a range of 1.3323-1.3341 while USDJPY traded in a range of 118.05-118.36.

The dollar suffered broadly after weaker new home sales data yesterday: the market was anticipating a modest gain of 990k but the actual 848k annualized number for February sparked a USD selloff. In addition, the previous three months' numbers were revised sharply lower.

One possible reason why recent new home sales numbers were much weaker than those of mortgage applications could be a reflection of the increasing number of applicants for mortgages being rejected because of tighter lending standards. A credit squeeze has been the fear of many investors since concerns over the subprime market came into the fray. On this evidence, there is little doubt that fears of a wider lending crunch that may go on to affect the consumption side of the economy will not ease any time soon. Despite the dollar's losses we suspect the setback may only be temporary, as equity markets remained steady and yields did not suffer significantly.

The implied Dec 07 Euro$ contract yield shed 3.5bp, though remains well above the levels seen earlier this month. Earlier this morning Fed voting member Moskow stated that stubbornly high inflation in the US remained the bigger risk to the economy than slower growth, but denied that the subprime fallout is affecting credit availability in the wider economy. Moskow's comments can only add to the continued uncertainty over Fed expectations since the last FOMC meeting.

While the official line is a drop of its long-held tightening bias, data volatility is failing to steer both policymakers and the market conclusively in any particular direction. Measures of risk aversions have clearly come off but as we note in our FX Perspectives published overnight, widening credit market spreads, higher oil prices and heightening tension over Iran suggest it may be premature to declare the March '07 risk aversion episode closed. Yesterday's price action continues to suggest that EURUSD upside remains capped, and the EUR's inconsistent risk sensitivity according to our FX Risk Index suggests a return in risk aversion is also unlikely to provide fresh momentum for EURUSD. As such we continue to see risk-reward favouring the USD in the short term.

Ahead today, the Conference Board's consumer confidence index is expected to fall in March and the March Richmond Fed manufacturing survey are scheduled to be released.

Fed's Pianalto will speak in Prague on currencies at 0900GMT, Fed official Braunstein, will testify on subprime mortgages before the House Financial Services Subcommittee at 1500GMT, and the Senate Finance Committee will hold a hearing on Sino-US economic relations at 14:00 GMT.

Market Update

2007-03-27T03:50:00.000-07:00

Stocks came back strongly after the disappointing New Home Sales. New ≈ 13% of Existing Home Sales and Existing Home Sales were a lot stronger than expected on Friday.

European stocks should be well supported by the end-of-day rally in the US yesterday. Today’s Consumer Confidence could change that.

USD likely to weaken slightly today. GBPUSD about to break higher. Look out for CAD in the next couple of days – especially on Friday.

Focus on IFO figures today.

Gold Update

2007-03-26T11:29:00.000-07:00

Spot gold holds at $663.50/oz, after trading in a $657.80/$664.30range.

Despite all the bullish factors there seems to be some invisible force capping us around $664/$665.

Gold topped out last Thursday at a nearly three week high of $666.60 and then closed the week around $656.50/75.

Once $672 is cleared, that should give us the legs to push to $700, while on the downside, a break under $640 might see us back towards $605,

In terms of existing positioning, Friday's CFTC data (positions as per March 20) showed that the non-commercial longs have taken nearly 6.2mn ounces out of the market and we are only $25 to $30 bucks lower - which is "positive" for gold.

New Home sales data out

2007-03-26T07:01:00.000-07:00

New Home sales out at 848K vs 990K expected
MoM -3.9% vs 5.7% expected

Dollar gets knocked lower

Crude Oil prices ease lower on profit-taking

2007-03-26T05:59:00.001-07:00

Crude oil prices easing lower on profit-taking after WTI Nymex crude oil fails to break above $63.00 level.

However, prices are seen underpinned by geo-political tensions between Iran and the West after the UN Security Council announced new sanctions against Iran on Saturday and following news that 15 Royal Navy personel were seized by Iranian naval vessels on Friday.

WTI Nymex crude oil is at $62.78, up 54 cents.

Market Update

2007-03-26T04:39:00.001-07:00

The USD strengthened on Friday due to the strong Existing Home Sales, but the trend is still lower – watch the New Home Sales Today. We still think that the dovish tone from the Fed will weigh more, hence a lower USD. Big data releases this week (GDP, Durables, PCE).

BoJ minutes showed an 8-1 vote for an increase, based on a 1-2 year outlook. Some pressure on the underlying inflation is expected.

Post FOMC gains in stocks were retained going into the weekend. We look for a re-test of pre-correction highs.

Gold Update

2007-03-23T10:20:00.000-07:00

Spot gold holds at $656.00/oz, on the low side of the day's range of $655.60 to $664.20.

The precious metal topped out Thursday just over $666 - near the March 2 breakdown high at $665.50.

Earlier in the week, players maintained that while a close over $660 was promising, a close over the March 2 would be needed for upward momentum to mount.

Market players, while paring back positions ahead of the weekend due to gold's inability to rally further, will likely buy any major dips, with an eye on a retest of the Feb highs near $689.

Iran Update

2007-03-23T05:19:00.000-07:00

BBC reporting Iranian forces holding UK sailors and marines in Gulf incident.

Precious Metals Futures Update

2007-03-23T04:04:00.000-07:00

Although Gold and Silver found new highs, they were short lived and it would now appear that precious metals could be in for a slight correction.

Yesterday's dollar rally could have aided the turn around and should be see some further downside, then this could weigh on metals prices.

Throughout this week we have eyeing up the 656.00 to 657.50 area as significant and a good area for fresh longs in the Gold market.

We will stick to our guns on this one and be willing to accept a correction back towards this level as significant, but enough for us to consider fresh longs from this level, at least on an intra-day basis.

Energy Futures Update

2007-03-23T03:59:00.000-07:00

Although the news regarding the US oil refineries increase gasoline production in preparation for the peak-demand summer driving season is significant, it can hardly be a surprise to the market. Moreover a change in sentiment brought about by speculative buying driven by hedge funds seems to be the main driver for higher prices.

Once again, the major nations in the UN brought some alterations to the table pertaining to a resolution imposing sanctions on Iran and suggested a vote by Security council on Saturday.

This is highly relevant to the energy market, however, we have a difficult time adding a huge premium to WTI prices on the back of what we see as chronic geo-political risks. In other words, this is not really news, but something that we have been factoring into prices for a long time now.

Yesterday market action can only really be described as one way traffic and although we could see some profit taking, we see any such move as short lived and a good opportunity for fresh longs. We reached our short term targets of 61.00 and 61.75 and by the looks of things we could move higher.

Thus we see any setback towards 61.30 to 61.05 as a good opportunity for fresh longs targeting 63.20.

Market update

2007-03-23T03:35:00.001-07:00

Credit Spreads are continuing to widen and we see an increasing number of stories about the negative impact on the economy from the faltering housing market. Today’s Existing Home Sales is key.

EURUSD being rejected at 1.3411, but ended the day higher. We are still bullish. The USD must head lower.

Yesterday’s lack of momentum in US stocks could turn out to become a problem in the technical picture. Another day like this could signal a severe reversal.

Crude Oil Update

2007-03-22T19:04:00.000-07:00

NYMEX Light Crude Futures continuation chart displays a strong reversal pattern that signals a possible end of the decline off 78.40 July 14, 2006 trend high, to 50.12, January 18 low.

Based on its price actions, the impulsive rebound from 50.12 to 64.29 is typical of a reversal formation.

Subsequent pullback is met with a firm rebound from 56.10, March 20 low and that sets up a bullish higher low formation.

Reinforced by MACD bullish divergence coupled with rising momentum indicators, expect an imminent break of the trend-line resistance off 64.15.

Beyond there confirms strength on a potential wave 3 up for 64.15.

Buoyed by rising moving averages, breach of 64.15 accelerates higher towards equality projection at 68.47, preceding a test on 70.66, Sep 1, 2006 high. Loss of 58.00 will instead hint of dips below 56.10, ahead of basing at 53.85.

Violation of 50.12, however, ignites next major fall to 44.60, Feb 2005 low.

Precious Metals Update

2007-03-22T17:25:00.000-07:00

Gold is poised to advance further, backed by double bottom reversal off the trend-line support.

While it remains cautious of the bear leg off 689.00, expect further gains over 667.61, fib.618 level ahead of 675.78, fib.764.

Sustained break there signals gains to 677.60, Feb 28 high before resuming bull leg to 689.00, Feb 27 trend top. Support zone at 657.20 and 652.40.

Under 633.00, Mar 5 low sours for 620.40, Jan 17 low and 602.20, Jan 5 low.

Silver continues to extend near term gains on respite off 12.605 last Wednesday's low which keep the bears sidelined for now.

However, further gains are likely to face tough resistance at 13.690, former support level.

Meanwhile, support zone is located at 13.060 Monday's low and only a violation of 12.605 risks 12.420 ahead of 12.109, 50% of 9.470 to 14.748 advance.

Platinum remains bullish and lurking for further gains since reversing off 1161.0 and 1170.5, Mar 5/Mar 6 lows.

Backed by bullish momentum, the break of 1238.0 sets up further recovery up-leg on rising uptrend channel to unlock 1254.0 and 1255.5, Feb 28 top.

Meanwhile, near term support stays firm as long as rising trend-line at 1220.4 holds, ahead of foothold at 1215.9/1209.0.

US Data: Leading Indicators

2007-03-22T07:01:00.000-07:00

Leading indicators out at -0.5% vs -0.4% expected

US Data out : 13:30 GMT

2007-03-22T05:29:00.000-07:00

Initial Jobless Claims out at 316K vs 325K expected
Continuing Claims out at 2501K vs 2545K expected

Metals Futures Update

2007-03-22T05:02:00.000-07:00

Precious Metals remained in bullish territory, but we need to see a move above resistance soon otherwise we will be in danger of a correction in gold and Silver. If we see a correction, we will be looking for strategic longer term bullish positioning in precious metals.

Any setback in Silver towards the 13.269 presents a good longer term level for buyers, likewise for 657.50 in the Gold.

Much of the buying is emanating out of the the Asian markets, with the rally in equities fueling the upside in especially gold. We expect this relationship to hold true for up- and downward momentum. Furthermore the current dollar weakness is also providing lift to the market. Stay true to these themes in today's trade, as they are the main market movers currently.

Energy Futures Update

2007-03-22T05:01:00.000-07:00

Crude Oil tested the lows yesterday once again, however still remains above support. We see this as significant, and a major indicator that prices are heading higher.

The weekly inventories was a mixed bag of tricks. However, the headline number for this round of the publication, namely the gasoline numbers, showed a draw of -3450k versus an expected draw of -2000k. With much of the focus drawn towards refinery utilization and gasoline supplies for the up-and-coming driving season, the market was pessimistic ahead of this number, however the extent of the draw surprised some traders.

More importantly though, inventories across the entire energy complex have been declining steady over the past six months and have now fallen by more than 100 million brls, a decline that is about "three times faster than the normal seasonal pattern". Some of the bullish flows into the market are adopting a simplistic but effective approach to the market, seen as being in a chronic bear mode on inventories and a higher demand side pull to consumption.

We are long from the lower end of the daily distribution at 59.375 with a target at 61.00 & 61.75. There is a possibility that this could be the lower end of a longer term rally in Crude, if you study a weekly chart, however we have yet to see a confirmation of this.

So those who are looking to catch the shorter term rally, then any setback below 60.00 remains a good level for longs.

Market Update

2007-03-22T03:08:00.000-07:00

The upshot of the Fed's statement looks to be on very similar lines to Bernanke's Feb. 28 testimony - it's watching the housing market carefully, it notes there are issues to be aware of, but with those issues not yet impacting the wider economy, it also needs to be mindful of the upside inflation risks that continue to linger.

The big changes between the FOMC's Jan 31st statement and today's message were: the alteration in the last line of the statement on the potential for a further tightening of policy. January's comment 'the extent and timing of of any additional firming' has been altered in March to 'Future policy adjustments..'. In other words the FOMC has very carefully altered to a more neutral outlook.

We could see another secular bear market in USD on this.

EURUSD to test 1.3666. AUDUSD to test 0.8214.

Stock traders apparently ignoring the negative stimulus from housing and purely focusing on the eased rate outlook. That might be a mistake.

Iran Update

2007-03-22T03:07:00.000-07:00

Iran asks buyers of its oil to pay in Euros or Yen but not in US Dollar

Japan : EarthQuake

2007-03-21T18:35:00.000-07:00

Earthquake shakes building in tokyo. (ReuterS)

Precious Metals Update

2007-03-21T17:45:00.000-07:00

Gold maintains near term bullish bias and continues to advance since bouncing off the trend-line support.

While it remains cautious of the bear leg off 689.00, recovery move has cleared 664.25, Mar 2 high which relieves bearish pressure.

Sustained break there signals gains to 677.60 Feb 28 high before resuming bull leg to 689.00, Feb 27 trend top. Support zone at 655.00 and 650.00.

Under 633.00, Mar 5 low sours for 620.40, Jan 17 low and 602.20, Jan 5 low.

Silver continues to extend near term gains on respite off 12.605 last Wednesday's low which keep the bears sidelined for now.

However, further gains are likely to face tough resistance at 13.690, former support level.

Meanwhile, support zone is located at 13.060 Monday's low and only a violation of 12.605 risks 12.420 ahead of 12.109, 50% of 9.470 to 14.748 advance.

Platinum stays positive and keen to extend further gains on strength on rebound off 1161.0 and 1170.5, Mar 5/Mar 6 lows.

Backed by bullish momentum, expect further recovery up-leg as it stays above former trend-line support.

Hence, expect bull leg resumption towards 1238.0, preceding a test on 1254.0 ahead of 1255.5, Feb 28 top. Support zone is located at 1215.9 and 1209.0 levels.

Gold futures push higher

2007-03-21T12:46:00.000-07:00

Comex and CBOT gold futures have hit their strongest levels since March 2 after the FOMC meeting.

A Fed statement may not only take away the possibility of further U.S. rate hikes, but the next step for policy-makers may be a decision by them on the opportune time in the near future to either begin talking about lowering interest rates or possibly even making an unexpected move to lower rates.

Obviously, for precious-metals markets that track dollar movements pretty closely, that has some significant bullish implications.

The Nybot dollar index is down 29 ticks to 82.82, compared to 83.19 two minutes ahead of the Fed statement.

Comex April gold has hit a high of $664, compared to pit settlement earlier of $660.
CBOT April gold has peaked at $664.20, compared to $659 around two minutes ahead of the FOMC statement.

FOMC statement changes

2007-03-21T11:17:00.000-07:00

Statement changes:
"recent indicators have been mixed" - prob refers to housing troubles.
Also, says explicitly "predominant concern remains that infl wil fail to moderate as expected."

FOMC rate decision

2007-03-21T11:16:00.001-07:00

FOMC leaves rates unchanged at 5.25% as expected
USD slips

10 minutes for FOMC rate decision

2007-03-21T11:06:00.000-07:00

10 minutes for the FOMC rate decision.
Releasing at 18:15 GMT

Gold Update

2007-03-21T08:30:00.000-07:00

Spot gold holds at $658.30/oz, after trading in a tight $658.20 to $661.85 range.

Gold remains firm partly due to a underlying negativedollar bias, with players thinking the Fed's accompanying statement maymake mentions of sub-prime mortgage woes and other economic concerns.

Any mention of elevated economic risks would no doubt prompt marketsto assign a greater probability to a Fed easing in the second half of the year, applying downward pressure on the greenback and spurring investment demand for the metal as a hedge against a dropping dollar.

Crude Oil Inventories Out

2007-03-21T07:41:00.000-07:00

Crude oil out at 3924K vs 1000K expected.
Gasoline out at -3450K vs -2000K expected.
Distillate out at -1710K vs -1500K expected.
Refinery Utilization out at 0.74% vs 0.50% expected

Precious Metals Futures Update

2007-03-21T03:19:00.002-07:00

Precious metals remain in bullish territory, with new highs expected today.

Any further weaknesses in the dollar should add momentum and provide more lift to the market.

Much of the physical buying in the Gold markets came as the Asian equity markets put in a strong session, with especially the Indian Nifty 50 market putting in a strong showing.

This spurred renewed buying and we expect the highs to be broken in today's session.

We favor trading Gold and Silver from the long side, anticipating the upward momentum to continue.

We will be looking for fresh longs on any setback towards 656.00 in April gold for a further extension to the upside.

Energy Futures Update

2007-03-21T03:19:00.001-07:00

We remain bullish on Crude as WTI trades against support in the 59.00 to 59.50 area. We expect this level to hold, even against any short term volatility or pressure from the weekly inventories.

The general market consensus indicates that market will be expecting a build in the Crude inventories of 1000k brls; a draw of -2000k brls in Gasoline and -1500k brls in the Distillates.
Although the current supply situation appears accommodative, they are far from capacious in lieu of rising demand. The reports being published today "will probably show gasoline supplies fell for a sixth time last week as refiners shut units in preparation for summer fuel making. US gasoline demand averaged 9.17 mill brls a day in the four weeks ended March 9, 2.8% higher than last year" the Energy Department said.

After what can only be described as a scary settlement in the April Crude contract yesterday (extending losses against the rest of the calendar months, which remained positive), we expect major support above the 59.00 level in the may contract to hold.

We remain long from 59.375 targeting 61.00 and 61.75 by the end of the week. Even if the weekly inventories show some downside, we expect support to show resiliance.

Market Update - FOMC important today

2007-03-21T03:18:00.000-07:00

FOMC tonight will be quite important in giving direction.
Will they indicate a tightening and kill the housing market to reduce inflationary pressure or vice versa?
We think, they will do nothing and try to wait it out.
They could point to the weak housing market and the high core inflation as balancing each other out in the mid-term.

Carry Trade crosses still looking strong, but USDJPY not able to close above its 200-day moving average (117.68)

Equities closing on a strong note. S&P500 making new highs for March.

Fixed Income looking tired. FOMC could be a tipping point.

FOREX ASIA UPDATE - USD

2007-03-20T17:44:00.000-07:00

The US dollar was the weakest currency overnight, while CAD registered the strongest gains.

USDJPY fell abruptly when PBoC Governor Zhou was quoted saying that China does not intend to accumulate further foreign exchange reserves.

Actually, we don't believe it has been an intention for China to accumulate FX reserves in the manner that it has, but is rather a by-product of other policies. In that sense, the comments should not be construed as either positive or negative for the dollar.

Zhou also said that a new investment agency will be allocated a portion of PBoC's reserves to be managed on a profit maximisation basis. This information is also not new.

The FOMC statement is due today at around 1815 GMT and is the main focus.

Our economists believe that the statement will express less confidence in the view that growth will be at least "moderate".

However, judging by the performance of equity markets this week, we think the market has already priced in a slightly more dovish FOMC.

As such, we suspect EURUSD is probably peaking around current levels, while the yen is biased to further strength against the dollar in line with the firmer tone of Japanese data and the uncertain carry trade environment.

Precious Metals Update

2007-03-20T17:31:00.000-07:00

Gold retains positive tone in the near term and continues to edge higher on rebound from the trend-line support.

While it remains wary of the bear leg off 689.00, recovery move has to overcome 664.25, Mar 2 high, before relieving bearish pressure.

Only a sustained break there signals further gains to 677.60 Feb 28 high before resuming bull leg to 689.00, Feb 27 trend top.

Under 633.00, Mar 5 low sours for 620.40, Jan 17 low and 602.20, Jan 5 low.

Silver extends near term gains on respite off 12.605 last Wednesday's low which keep the bears sidelined for now.

However, further gains are likely to face tough resistance at 13.690, former support level.

Meanwhile, support zone is located at 13.060 Monday's low and only a violation of 12.605 risks 12.420 ahead of 12.109, 50% of 9.470 to 14.748 advance.

Gold Update

2007-03-20T10:40:00.000-07:00

Spot gold holds at $658.10/oz after trading in a $653.40/$660.60 range.

At current levels, the precious metal is a bit above the March 9 high at $658, seen after the commodity/equity purge low at $633.30 on March 6.

Gold still needs to vault the $665 breakdown high seen March 2 before it can revisit the $688/$689 highs from late Feb.

$656/$661 is a tough resistance zone, a break above should see a swift move to higher levels as recent shorts are forced to cover.

USD is under pressure

2007-03-20T06:07:00.000-07:00

USD is under pressue.
A magazine reports China CBs Zhou saying China wont accumulate more FX reserves.... large US Investment Bank as main seller of USDJPY

US Data out

2007-03-20T05:31:00.001-07:00

Housing Starts out at 1525 vs 1450K expected.
Housing Permits 1532 vs 1550K expected

Market Update

2007-03-20T03:03:00.000-07:00

Bank of Japan keeping rates fixed and stating in their monthly report that inflation is expected to be around zero in the coming months telling us that the JPY will weaken further in the short to medium term.

AUDUSD broke 2004 highs but did not manage to close above. We see more upside in the pair towards 1996 highs at 0.8214.

US stocks gain on high M&A activity. Expect Europe to move higher today.

Precious Metals Update

2007-03-19T17:53:00.000-07:00

Gold continues to stay above the rising moving average and trend-line support.

While it remains wary of the bear leg off 689.00, any recovery move has to overcome 658.10, Mar 9 high and 664.25, Mar 2 high, before relieving bearish pressure.

Only a sustained break there signals further gains to 677.60 Feb 28 high before resuming bull leg to 689.00, Feb 27 trend top.

Under 633.00, Mar 5 low, however, sours for fall to 620.40, Jan 17 low ahead of 602.20, Jan 5 low.

Silver remains cautious below 13.690 former support from Feb 20.

Near term rebound on respite from 12.605 last Wednesday's low keep the bears at bay but further gains over 13.309, Fib.382 level is likely to face tough resistance at 13.690.

Violation of 12.605 risks 12.420 ahead of 12.109, 50% retracement of 9.470 to 14.748 advance.

FOREX ASIA UPDATE - USD

2007-03-19T17:51:00.000-07:00

The USD was mixed overnight, taking a back seat to the high-yielding AUD and NZD, which rose at the expense of the low-yielding CHF and JPY.

Most notable was AUDUSD, which rose to highs above 0.8030 early this morning, still underpinned by more hawkish central bank expectations following RBA Edey's speech on Friday.

US 2 and 10-year Treasury yields rose by 3 and 2bp respectively, while the S&P500 rose by a strong 1.1% from Friday's close.

The US housing market index came in a bit weaker than expected but this had no discernible impact. The index declined to 36 in March from 40 in February and was the first decline since September, with a reading below 50 indicating that more homebuilders believe that conditions are poor.

Deputy Treasury Secretary Kimmitt was upbeat on the US economy and said that the housing market appeared to be stabilising and weakness was not spreading to the consumer sectors. We continue to expect pressure on carry positions to resume in the coming weeks and look for US data to weaken sufficiently to keep rate cut prospects in play.

However, with the data calendar quiet this week, we suspect that the current rebound in carry trade sentiment could have a bit further to go, to the benefit of the USD. Dollar sentiment could be further bolstered if the Fed elects to offer little or no acknowledgement of economic weakness in its statement on Wednesday.

Our economics team expects the Fed to nudge their statement at least moderately in the neutral direction, but with the USD near the bottom of its recent ranges vs. the EUR, we think risk-reward favours USD tactical longs at current levels.

Accordingly, go long USDCHF as a trade recommendation, entering at 1.2092, with stop set at 1.1965 and target at 1.2350.

Looking ahead and housing starts for February is due at 1230 GMT. The FOMC begin their two-day meeting today.

Market Update

2007-03-19T00:46:00.000-07:00

Weekly bars in Asian Carry Trade crosses and GBPJPY look very strong, headed for full retracement higher. Only concern is USDJPY, which looks weak. EURUSD headed towards 1.3666 (chances are seen).

Equities still not looking strong. Especially Emerging Markets shares still look weak, but major indices not too impressive either.

Possible triggers for bigger events: Credit spreads to widen more. US Housing Figures to come out still weaker. FOMC statement to be hawkish.

Precious Metals Update

2007-03-18T17:19:00.000-07:00

Gold hovers above the rising moving average and trend-line support.

Cautious of the bear leg off 689.00, recovery up-leg has to clear 658.10, Mar 9 high and 664.25, Mar 2 high, before relieving bearish pressure.

Beyond there bodes well for further gains to 677.60 Feb 28 high before resuming bull leg to 689.00, Feb 27 trend top.

Loss of 633.00, Mar 5 low, however, sours for deeper fall to 620.40, Jan 17 low ahead of 602.20, Jan 5 low.

Silver bearish pressure stay intact below 13.690 former support from Feb 20.

The respite from 12.605 last Wednesday's low keep the bears at bay for now and gains over 13.150, Mar 8 high is likely to face resistance at 13.690.

Violation of 12.605, however, dampens for 12.420 ahead of 12.109, 50% retracement of 9.470 to 14.748 advance.

Gold Update

2007-03-16T07:15:00.000-07:00

Gold pushes higher as with USD weakness earlier in the morning.
Gold Resistance is at 658.10, Mar 9 high, clearing that we shall see it push high ahead of 677.60, the Feb 238 high.

U. of Michigan Confidence out

2007-03-16T07:03:00.000-07:00

U. of Michigan Confidence out at 88.8 vs 89.0 expected

Comex Gold/Silver helped by overnight dollar weakness

2007-03-16T06:22:00.000-07:00

Comex gold and silver remain at higher levels, helped by overnight dollar weakness, but have not moved much since a U.S. CPI report.

Overall CPI was slightly above the forecast but core CPI excluding food and energy matched expectations.

April gold is up $5.10 to $652.20 an ounce, after trading at $652 two minutes prior to the data. May silver is up 5.5 cents to $13.13, compared to $13.14 just ahead of time.

US Data

2007-03-16T06:17:00.000-07:00

US CPI was out at 2.4% vs 2.3% expected.
Ex Food & Energy YoY was out 2.7% vs 2.7% expected.
Capacity Utilization was out at 82.0% vs 81.3% expected.
US Industrial Production was out at 1.0% vs 0.3% expected.

Market Update : CPI IMPORTANT TODAY

2007-03-16T01:32:00.000-07:00

Good Morning Everyone,

Today’s CPI figures are very important. A low reading would suggest a weakening US economy and add to the recent worries about a subprime spill-over effect.

Our Index of Weekly Economic Indicators is about to make new highs – primarily due to supportive monetary figures and strong weekly chain store sales. A high reading would reinforce the bullish case for the US rate outlook.

FX: Anything can happen, but on a lower than expected reading of US CPI, we expect EURUSD in 1.34 shortly.

Fixed Income has lost momentum and a turnaround lower is not unlikely. That would be JPY bearish.

Has the market talked enough about subprime spill-over? Financial stocks with subprime exposure are being picked up…

FOREX ASIA UPDATE - USD

2007-03-15T18:23:00.000-07:00

Carry trades recuperated further overnight with AUD and NZD the strongest performing currencies, while JPY was the worst performer.

There was a flurry of mixed economic data overnight, with PPI, jobless claims, the TIC report, Empire State and Philly Fed all released, and overall yields in the US finished higher.

PPI came in stronger at 1.3% in February against -0.6% in January, while initial jobless claims fell to 318k from a revised 330k in January.

However, Empire manufacturing slumped to 1.9 from 24.4 in the prior month and the Philly fed dropped to 0.2 from 0.6 in January, much less than market expectations of 4.0. US TIC portfolio flow data for January showed a strong recovery in net demand for US portfolio securities after a weak December. Net flows into US long-term securities (adjusted for prepayments on ABS and net of US buying of foreign securities) rebounded to $84 bn after slumping to 8-year lows of $1 bn in December.

December is typically the weakest month of the year from a seasonal standpoint, and January is typically average. The detailed data shows solid foreign buying of US securities across all asset classes, particularly equities, and reveals that US investor appetite for foreign stocks and bonds moderated from December's record levels.

However, market conditions and US economic data have changed rather drastically since January, and markets may be cautious about extrapolating January strength forward. The housing market index is released on Monday and is expected to continue its downward trend. Combined with a likely soft CPI, EURUSD should remain bid heading into next week's FOMC meeting.

Ahead today, CPI data is due at 1230 GMT, industrial production and capacity utilisation at 1315 GMT. The market is divided over CPI and core CPI on a monthly basis but sees upside risk on the annual numbers. While monthly CPI is expected to be higher than January, the markets expect a softening in the core CPI numbers.

Philly Fed out

2007-03-15T09:01:00.001-07:00

Philly Fed out at 0.2 vs 4.0 expected

Equities Update

2007-03-15T09:00:00.000-07:00

Volumes winding down and S&P 500 fails to advance much beyond 1395.

The Iceland story is worth following, broader EM worries and weaker USD would also reduce appetite for equities but, of course, its tought to believe in a more violent down move after yesterdays recovery.

Iran Sanctions

2007-03-15T07:50:00.000-07:00

Major powers reach agreement on sanctions package for Iran, Britain says.
Such news shall support precious metals

Data Reaction

2007-03-15T05:35:00.001-07:00

Dollar barely changed, slightly stronger at first on the early US data as PPI surprises to the upside and as Empire State index slumps. Stock futures slide. Tsys tumble. Gold Stable. Eur/usd in the same range, in mixed levels

Gold Update : Chances for it to hit $633

2007-03-15T05:34:00.001-07:00

Gold remains heavy following the recent rejection off channel resistance at 689.00.

The channel base at 633.00 marks the next objective and also key support.

Gold remains weak with momentum studies still in a hard down position.

This highlights the potential for further weakness in the metal.

The recent rejection off 689.00 also marked a rejection off a key channel top and this has opened the channel base which currently lies at 633.00.

The channel base also marks a key support zone and should this level break, scope would exist for a move towards 620.40, Jan 17 low and also open 602.20 which is the Jan 5 low.

Resistance is at 658.10, Mar 9 high ahead of 677.60, the Feb 238 high.

Oil Update

2007-03-15T05:33:00.000-07:00

Wire reporting comments from an OPEC delegate saying that OPEC has agreed to keep its oil output unchanged.

US Data : 12:30 GMT out

2007-03-15T05:32:00.000-07:00

Produce Price index out at 1.3% vs 0.5% expected

PPI Ex Food & Energy out at 0.4% vs 0.2% expected

Initial/Continuing Claims out at 318K/2576K vs 328K/2538K expected.

Empire Manufacturing out at 1.9 vs 17.5 expected

US Data coming in few minutes

2007-03-15T05:20:00.000-07:00

A string of US data will be released at 12:30 GMT.
The PPI MoM/YoY expected at 0.5%/1.9% vs -0.6%/0.2% prior.
Core PPI expected at 0.2%/1.7% vs 0.2%/1.8%.
Jobless Claims expected at 328K as prior.
Empire Manufacturing expected at 17.5 vs 24.4 prior

Energy Futures Update

2007-03-15T02:40:00.000-07:00

Today's main event remains pointed towards the OPEC meeting and what rhetoric that might arise of it.

Yesterday's weekly inventory data painted a mixed picture of the current supply situation, which led to some short term volatility in the markets, before WTI turned slightly bullish with some short covering after the recent weeks losses.

We expected OPEC to keep production on hold, with the faster than normal drops in OECD inventories and the tightening of inventory balance projections both argue for NO CHANGE in output. If this is the case, then there really is very little downside in the WTI crude market and we expect this to hold true above the $57.75 level.

The significance of $57.75 is becoming more evident for each time we test it. Yesterday's test was no different than the many times we came upon major support throughout February. Any move into the 57.75 to 57.45 area will leave the market in nervous territory.

We would resist the temptation to be involved at that level and only sell into a break below 57.45.

Other than that, we favor a slightly optimistic view to WTI Crude prices, even ahead of the OPEC meeting.

Market Update

2007-03-15T02:39:00.001-07:00

USD sell-off rebounded as US stock markets was able to close in positive territory.

We expect this to be jitters as market awaits US PPI today and CPI tomorrow.

We are negative biased towards market consensus that we will see a rise of 0.5% in the PPI.

Despite yesterday’s come back we still see indices heading toward their 200 day MA’s in the short term.

Precious Metals Update

2007-03-14T17:33:00.000-07:00

Gold stays above the rising moving average and trend-line support despite Wednesday's dip to 637.00 low.

Cautious of the bear leg off 689.00, recovery up-leg has to clear 658.10, Mar 9 high and 664.25, Mar 2 high, before relieving bearish pressure.

Beyond there bodes well for further gains to 677.60 Feb 28 high before resuming bull leg to 689.00, Feb 27 trend top.

Loss of 633.00, Mar 5 low sours for 624.57, 50% ret of 560.13 to 689.00 rally.

Silver downside risks stay intact below 13.690 former support from Feb 20.

The rebound from 12.605 Wednesday's low keep the down-leg at bay for now and gains over 13.150, Mar 8 high is likely to face resistance at 13.690.

Sustained break of 12.605, however, sours for a test of 12.420 ahead of possible break to 12.109, 50% retracement of 9.470 to 14.748 advance.

Crude Oil Inventories Out

2007-03-14T07:33:00.000-07:00

Crude Oil out at 1180K vs 2000K expected.
Gasoline out at -2486K vs -2375K expected.
Distillate out at -2733K vs -2075K expected.
Refinery Utilization out at -0.23% vs 0.50% expected.

Precious Metals Futures Update

2007-03-14T06:34:00.000-07:00

April Gold and May Silver under pressure below $647 and $12.95/13.00 respectively.

Oil reaction to the US inventories at 15:30 CET will be closely watched for Metals direction.

If Equity weakness continues look for more Metals Fund Liquidation and new lows.

Comex Gold/Silver trade in softer tone

2007-03-14T06:08:00.000-07:00

Comex gold and silver have a softer tone in early trading after the late-Tuesday sell-off in U.S. stocks spread to other markets around the globe.

Gold traders are concerned about being "overly long" in metals at the moment.

The investment community is probably a little long still.

Some are paring back positions and some are holding on.

But certainly, they are not coming in on the buy side yet.

April gold is down $6.40 to $643 an ounce and May silver is down 17 cents to $12.79.

Dollar gets boost after the Data

2007-03-14T05:40:00.000-07:00

The dollar rose modestly after the U.S. current account deficit narrowed sharply at the end of 2006.
The greenback is now little changed against the yen from day-earlier numbers after starting the session on its back foot.
The data also gave the dollar some support against the euro.

Current Account Balance was out at -$195.8B vs -$203.5B expected
Import Price Index was out at 0.2% vs 0.8% expected
Capacity Utilization Rate was out at 82.5 Vs 83.5 expected

Crude Oil Update

2007-03-14T05:38:00.000-07:00

Crude oil preserving the $57.80 support before the US inventories at 15:30 GMT.
Below the $58.30/50 Short Term and more importantly $60.00 focus has to be lower towards $56.50 and $54.50.
Keep in mind also tomorrows OPEC meeting in Vienna.

Expected DOE inventories - Crude +2000K, Gasoline -2375K, Distillate -2075K.

Opec concerned about US housing market

2007-03-14T05:37:00.000-07:00

OPEC is concerned about impact of US housing market woes on global econ.

"There is very much concern about whether problems in the U.S. housing market become more widespread," an official said.

"This issue with the U.S. subprime market could get bigger and have a bigger macroeconomic impact."

Crude oil tumbled Tue on the back of weaker stocks, but has recovered overnight ahead of DOE data and as the OPEC gathering gets underway in Vienna.
April crude up 12c to $58.05 in electronic trade.

Precious Metals Update

2007-03-13T17:02:00.000-07:00

Gold stays positive and continues to base near 640.00 support zone.

As the bear leg off 689.00 stalled ahead of support zone bounded by 633.00, Mar 5 low and 624.57, 50% retracement of 560.13 to 689.00 rally, oversold momentum is poised to turn higher.

Expect pending recovery over 664.25, Mar 2 high and 677.60 Feb 28 corrective high, before resuming bull leg towards recent high at 689.00, Feb 27 trend top.

Silver retains bullish bias and look to consolidate further at support zone near 12.610 Mar 6 low.

With the momentum indicators heading higher, expect renew up-leg towards 13.150, Mar 8 high ahead of 13.740, Mar 2 high which it may face some resistance there.

Beneath 12.610, however, sours for a test of 12.420 ahead of possible break to 12.064.

US Tsy Sec Paulson Speaking

2007-03-13T05:49:00.001-07:00

US Tsy. Sec. Paulson speaking on competitiveness of US financial markets.
Nothing market moving yet so far

US Data out: Retail Sales

2007-03-13T05:30:00.000-07:00

Advance retail Sales out at 0.1% vs 0.3% expected.
Retail Sales Less Autos out at 0.1% vs 0.3% expected.

Market Update

2007-03-13T03:13:00.000-07:00

Fixed Income going higher, despite strong labor market data. This shows that there are still a lot of worries out there. Japanese 6-month rates about to make new highs again. We could be in for another round of JPY strength today.

USDJPY rejected at 50% Fibonacci retracement. Other JPY crosses also looking weak again.
Stocks are in danger of another sell-off.

EM currencies looking weak. EURHUF probably the best risk reward out there for a long position.

Precious Metals Update

2007-03-12T17:55:00.001-07:00

Gold looks positive as the recent bear leg off 689.00 sizzled out ahead of support zone bounded by 630.65, trend-line support and 624.57, 50% retracement of 560.13 to 689.00 rally.

While positive momentum is seen heading higher, rebound from 633.10 Mar 6 low signals recovery over 664.25, Mar 2 high and 677.60 Feb 28 corrective high, before resuming bull leg towards recent high at 689.00, Feb 27 trend top.

Silver has managed to contain its recent pullback off Feb 26 high at 14.748, above 12.420 Mar 5 low.

Subsequent respite off 12.610 Mar 6 low signals a possible trend reversal on rising momentum.

Hence, expect renew up-leg towards 13.150, Mar 8 high ahead of 13.740, Mar 2 high which it may face some resistance there.

Beyond there ignites an eventual test on 14.335, Mar 1 high. Beneath 12.610, however, sours for a break of 12.420 ahead of 12.064.

Gold Update

2007-03-12T07:51:00.000-07:00

Spot gold holds at $648.35/oz ($646.35/$653.75 range), with the precious metal, like FX and stocks, weighed by risk aversion.

CFTC data shows speculative positions at 16.12 mn oz as per March 6 vs 21.62mn oz the prior week.

The sharp decline of 5.5m oz was "one of the largest one week sell-offs seen in the gold market", noting also that there have been only 3 occasions since 2000 where positioning declines were more than 5 mn oz in a week.

Nevertheless, at 16.12 mn oz - positions remain "elevated" and suggest scope for further gold declines. Only when the COTR report has seen most of the recently added speculative long positions eliminated OR we see very steady and solid physical demand returning to the gold market will we turn tactically bullish on gold.

Comex Gold/Silver follows crude oil

2007-03-12T06:33:00.000-07:00

Comex gold and silver are near steady to fractionally lower in the early going, with no major features developing so far other than perhaps softer crude oil keeping the metals contained.

There is nothing of note yet. Oil prices are very soft, and it's possible that's having something to do with it.

April gold is down $1.10 to $650.90 an ounce.

May silver is down a penny to $12.96.

April crude oil has fallen 95 cents to $59.10 a barrel.

Market Update

2007-03-12T02:49:00.000-07:00

A round of strong labor market data across the board is supporting the global rate outlook.

Fixed Income was selling off in a strong reversal Friday and US10Y’s were not able to break or even test the December highs.

Stocks are edging higher, despite the much-quoted dispute between Bernanke and Greenspan about the likelihood of a recession with the bond market yield curve inversion even more bearish on the US economy than Greenspan.

Today, the correction should continue with Carry Trade crosses and stocks going higher.

Crude Oil Update

2007-03-11T19:18:00.000-07:00

Crude traded lower from the high of $59.81 to $59.27 breaking support turn resistance now at $60.00 level.
Crude oil slip with USD strength and ahead of this week OPEC meeting as well Organisation of Petroleum Exporting Countries meeting in Vienna this thursday.

FOREX ASIA UPDATE - USD

2007-03-11T18:36:00.000-07:00

High-yielding currencies performed strongly on Friday, with the New Zealand dollar gaining the most ground, while the yen was the weakest currency.

EURUSD traded down to 1.3086 from a high of 1.3159 in response to the payrolls data, while USDJPY rose to 118.38 from 117.28.

A rise in yields helped propel the dollar higher, with 2-year Treasury yields up by 11bp from Thursday's close, in contrast to Eurozone 2-year yields, which rose by just 3bp and Japanese yields, which actually declined slightly. Non-farm payrolls were in line with expectations at 97k in February, down from 147k in December (which was revised up from 111k).

Hawkish comments from the Fed with regards to inflation expectations aided the dollar. The Fed's Kohn said that inflation expectations were "critical" and criticised the notion that actual inflation trends lead inflation expectations.

Also on Friday, Fed's Lacker (a non-voting member) said that it was questionable whether current inflation expectations were anchored enough for price stability. Meanwhile, investor appetite for risk was probably aided by comments by Fed's Bies that there was no sign of contagion from the sub-prime lending market.

It is a busy data week in the US with retail sales, CPI, industrial production, and the New York and Philadelphia Fed manufacturing surveys on the calendar. We expect initial jobless claims, released Thursday, to be stable at 330k.

The next key signposts for the Fed will be CPI, released Friday, and the housing market index the following Monday, both of which will likely influence the wording of the March 21 FOMC statement.

We forecast core CPI of 0.2% m/m, a slight decline from the prior month. We do not forecast the TIC series, but our own flow data suggests January saw a slight improvement over weak December flows.

Looking ahead to today, and Fed's Kroszner speaks on "Inflation Dynamics" at 1645 GMT.

Precious Metals Update - Gold looks to complete bear run

2007-03-11T18:28:00.000-07:00

Gold is likely to complete its bear run ahead of support zone bounded by 630.65, trend-line support and 624.57, 50% retracement of 560.13 to 689.00 rally.

While negative momentum wanes, rebound from 633.10 Mar 6 low signals recovery ahead.

Upside, expect a sustained clearance of 664.25, Mar 2 high and 677.60 Feb 28 corrective high, before resuming bull leg towards recent high at 689.00, Feb 27 trend top.

Silver may have completed its corrective pullback from Feb 26 high at 14.748.

It has settled near 12.420 Mar 5 low and respite off 12.610 Mar 6 low signals a possible trend reversal on rising momentum.

Hence, expect renew up-leg towards 13.740, Mar 2 high which it may face some fight there, preceding eventual return to 14.335, Mar 1 high.

Market Update : NFP important today

2007-03-09T00:50:00.000-08:00

Trichet made his usual comments that the ECB will be ‘accomodative’ on rates and economy remains expansionary.

Trichet neglected to use the word ‘strong vigilance’ which confirms to us that the next move by the ECB is a pause sending EUR slightly lower.

Today’s NFP is the main event as we have seen disappointing figures out of the US but inflation is still a fact of life for the Fed which we saw through Unit Labor Costs and the Prices Paid.

NFP is a good indicator which is set to continue.

Stocks continue to retrace but the entire move since Monday could be negated following a weak NFP.

Gold Update

2007-03-08T07:58:00.000-08:00

Spot gold holds at $653.50/oz, after trading in a $648.10/$655.70 range.

In the past, gold has taken it's tone from dollar direction, but more recently it has been driven by market appetite for risk.

With carrytrades being cautiously put on again and global equities on the rise, the subtle demand for gold being seen is not a surprise.

Initial resistance is seen at $660/$661 - the 50% retracement of the move from the late Feb high at $689 and recent low near $633.

Comex Gold / Silver slightly higher

2007-03-08T06:12:00.000-08:00

Comex gold and silver are slightly higher but down from earlier levels.

A small dip occurred after an ECB rate hike, although it was nothing significant.

When there are rate increases, the perception is that central bank is fighting inflation.

Worries about rising inflation tend to support gold. Otherwise, the market is drawing support from global tensions and the charts, including recent higher closes, all of which help the momentum players.

April gold is up $1.10 to $654 an ounce but down from an electronic $656 high.
May silver is up 1.5 cents to $13.12 but down from an electronic high of $13.235.

Precious Metals FUTURES Update

2007-03-08T02:41:00.000-08:00

Precious metals retained a bullish tone yesterday as consolidation and short covering after the recent sell off continued.

Some of the upside was still attributable to drag on the bullish data on Crude inventories and some purchasing on the industrial metals segment.

However the main event still has to be tomorrow's Non Farm Payrolls.

Tomorrow's event could cap any current further rally today, setting up for a range bound day in Gold and Silver.

We remain bullish, especially on silver, however not from current levels.
We will await any setbacks and look for new longs at lower levels.

Energy Futures Update

2007-03-08T02:33:00.000-08:00

Bullish inventory data gave Crude Oil renewed upward momentum, yesterday, driving prices higher amidst good volume trading.

The headline numbers showed that Crude Oil inventories dropped -4848k vs 1800k barrels and Gasoline -3750k vs -1500k, whereas distillates show a slightly lesser draw than expected.

Moreover, the EIA also published expectations that there is a high probability of a sharp tightening in the market, citing a very uncertain non-OPEC growth in oil production for 2007 and 2008.

Without too much detail, we continue to see increasing demand against a decreasing scale to production (refinery utilisation was down once again too) from OPEC and Non-OPEC countries, and, quite frankly at some point, something has got to give.

We will be looking for an opportunity for some longer term bullish positions in the near future.

All in all, this left the market with a bullish tone, one that is expected to continue throughout the rest of the week. However, we are still waiting for major resistance to be broken, with all eyes focused on $62.50, setting up for a move towards 63.35 and 65.04.

Buy April WTI Crude on any setbacks towards 61.12, targeting a move higher towards 63.35 and 65.04.