Rough day on Wall Street and Gold, The Rupee holds steady
Recent long liquidation continued in gold and silver futures Thursday, with technically oriented selling accelerating the declines, analysts said.
The rupee on Thursday closed barely steady at 40.34/35 against the dollar in a two-way movement on alternate bouts of buying and selling.
In an active trading the Indian currency opened at 40.34/35 but recovered in late morning deals to a high of 40.27 a dollar.
However, dollar purchases by state-run banks on behalf of the Reserve Bank of India in the afternoon pulled the rupee down to close at the opening level of 40.34/35, barely steady against Wednesday’s close of 40.35/36 a dollar.
They cited profit-taking in connection with the sharp loss in U.S. equities,plus an unwinding of so-called carry trades. Market watchers also cited general risk aversion. One added that Comex gold and silver options expiration appeared to add to the selling pressure.
December gold fell $11.40 to $675.10 an ounce on the Comex division of the New York Mercantile Exchange. As pit trade was closing, the December contract at the Chicago Board of Trade was down $11.30 to $675.30.
A couple of traders reported that sell stops were hit.
"It's really more liquidation," said Mike Zarembski, senior commodities analyst with optionsXpress. "We went through a couple of key moving averages -both the 100-day average and the 20-day moving averages. That kind of set the tone for a lower market. As well, there is the weakness in the stock market."
Late in the session, the 100-day moving average for Comex December gold passed through $684.60, while the 20-day average passed through $678.50.Furthermore, the market fell through the 50-day average around $675.90 and200-day average at $674.20.
Another key technical level that failed was the July 17 low of $678.50, saidPatrick Fearon, precious-metals analyst with A.G. Edwards. He put the next support around $660, after the December futures held at $660 on July 5 and $659on July 6.
December gold fell to a low of $666.30 and September silver to $12.755, their weakest levels since July 6. At the session low of $666.30, December gold had fallen $31.20, or 4.5%, so far this week.
Meanwhile, Comex September silver fell 20 cents to $12.95. As it was closing,CBOT September silver was down 19.7 cents to $12.945.
Comex September silver fell through its 20-day average that was around $12.99after previously falling below the 50-day average that was at $13.17 late inthe session.
Yet another area where technical selling appeared was the July 17 low of$12.925, said Fearon. He put the next key support areas around $12.49 and$12.24.
Historically, said Zarembski, a sell-off in equities might have meant investors shifted funds into gold. In recent months, however, there appears tobe a tendency for investors to liquidate gold holdings in order to raise cash when stocks fall dramatically, he pointed out.
"Some people may be in trouble and trying to get liquid again," said Zarembski. "And one of the best places to get liquid is to get rid of positions, and gold was a nice performer for a lot of these players. Some moneyis definitely being taken off of the table."
As the gold pit was closing, the Dow industrials were down by around 275points.
Jon Nadler, analyst with Kitco Bullion Dealers, pointed out that the sell-offin gold occurred even though the dollar index was softer and crude oil firmed -factors that tend to underpin the metal.
"Gold's feeble attempt at making positive headway overnight made a sharp U-turn, becoming a hefty slide as the trading day unfolded," Nadler said."Additional factors weighing on bullion were also seen in the more than200-point drop suffered by the Dow, and the implications that such a decline may portend for margin call liquidations and the resurgence of generalized risk aversion - both of which were negative factors in gold's spring-time slump."
Zarembski and Fearon also cited unwinding of carry trades. Carry trades occurwhen investors borrow money in a country with low interest rates and theninvest in other assets, including gold. Evidence of this unwinding is the strength in the Japanese yen and Swiss franc, said Fearon.
"Japan and Switzerland are currently the main sources of carry trades. As those trades are unwound, whatever investments implemented by those trades are taking a hit," he explained.
Worries about the U.S. sub-prime market persist, Fearon added.
"With those concerns, people are thinking the U.S. economy might slow more than currently expected, and that might bring down inflation concerns. That is probably also weighing on the precious metals."
Some investors buy gold and silver as a hedge against possible inflation.
Meanwhile, October platinum fell $2.80 to $1,328.10 an ounce, while Septemberpalladium edged 25 cents lower to $368.05 an ounce.
"It seems to be lockstep with gold," said a trader.
Nevertheless, platinum and palladium are holding up better than gold andsilver, he continued. The logical explanation, he continued, is the continued threat of a platinum supply threat in South Africa, where unions and several platinum-mining companies still have not reached settlements after a number of old labor agreements expired earlier this summer.
"There is no resolution at this point," said the trader. "Things still seemto be contentious. They (traders) are eying it. That is helping support the platinum and palladium prices, although they are lower."
A strong rupee, a sensex bounding past 15000, Indian companies making headline grabbing global acquisitions, the insidious influence of Indian films - these are the parts that add up to the whole - ie. Brand India and its rising profile. Cashing in on the timing are two new Brand India campaigns - the tourism ministry's "India Now" campaign and the "India at 60" campaign of the CII and the US India Business Council.
It's a potent mix of symbols - Shilpa Shetty - India's latest, de facto cultural ambassador and the Taj - the desi wonder of the world floating down the Thames. Both were playing their part in Brand India's latest marketing campaign. The purpose: to flag off the 'India Now' campaign - an initiative by the Mayor of London, supported by the Tourism Ministry of India. India Now may be preaching to the converted - but could still find first impressions hard to crack. As India is still being seen as the land of noise, colour and spicy food...all of which is true. Only, now there are more things to advertise!
Settlements (includes open-outcry and electronic trading): London PM Gold Fix: $670 versus $674.75 Wednesday Spot gold at 1:30 p.m. EDT: $663.15, down $12 from previous day; Range:$658.05-$676.90 December gold (GCZ07) $675.10, down $11.40; Range $666.30-$690 September silver (SIU07) $12.95, down 20 cents; Range $12.755-$13.235 October platinum (PLV07) $1,328.10, down $2.80; Range $1,320.70-$1,337.90 September palladium (PAU07) $368.05, down 25 cents; Range $364-$369
Rupee / US Dollar Forex Currency News, Gold in India, and The Sensex index on the Bombay Stock Exchange (BSE). Euro / Rupee and Yen / Rupee.
The rupee on Thursday closed barely steady at 40.34/35 against the dollar in a two-way movement on alternate bouts of buying and selling.
In an active trading the Indian currency opened at 40.34/35 but recovered in late morning deals to a high of 40.27 a dollar.
However, dollar purchases by state-run banks on behalf of the Reserve Bank of India in the afternoon pulled the rupee down to close at the opening level of 40.34/35, barely steady against Wednesday’s close of 40.35/36 a dollar.
They cited profit-taking in connection with the sharp loss in U.S. equities,plus an unwinding of so-called carry trades. Market watchers also cited general risk aversion. One added that Comex gold and silver options expiration appeared to add to the selling pressure.
December gold fell $11.40 to $675.10 an ounce on the Comex division of the New York Mercantile Exchange. As pit trade was closing, the December contract at the Chicago Board of Trade was down $11.30 to $675.30.
A couple of traders reported that sell stops were hit.
"It's really more liquidation," said Mike Zarembski, senior commodities analyst with optionsXpress. "We went through a couple of key moving averages -both the 100-day average and the 20-day moving averages. That kind of set the tone for a lower market. As well, there is the weakness in the stock market."
Late in the session, the 100-day moving average for Comex December gold passed through $684.60, while the 20-day average passed through $678.50.Furthermore, the market fell through the 50-day average around $675.90 and200-day average at $674.20.
Another key technical level that failed was the July 17 low of $678.50, saidPatrick Fearon, precious-metals analyst with A.G. Edwards. He put the next support around $660, after the December futures held at $660 on July 5 and $659on July 6.
December gold fell to a low of $666.30 and September silver to $12.755, their weakest levels since July 6. At the session low of $666.30, December gold had fallen $31.20, or 4.5%, so far this week.
Meanwhile, Comex September silver fell 20 cents to $12.95. As it was closing,CBOT September silver was down 19.7 cents to $12.945.
Comex September silver fell through its 20-day average that was around $12.99after previously falling below the 50-day average that was at $13.17 late inthe session.
Yet another area where technical selling appeared was the July 17 low of$12.925, said Fearon. He put the next key support areas around $12.49 and$12.24.
Historically, said Zarembski, a sell-off in equities might have meant investors shifted funds into gold. In recent months, however, there appears tobe a tendency for investors to liquidate gold holdings in order to raise cash when stocks fall dramatically, he pointed out.
"Some people may be in trouble and trying to get liquid again," said Zarembski. "And one of the best places to get liquid is to get rid of positions, and gold was a nice performer for a lot of these players. Some moneyis definitely being taken off of the table."
As the gold pit was closing, the Dow industrials were down by around 275points.
Jon Nadler, analyst with Kitco Bullion Dealers, pointed out that the sell-offin gold occurred even though the dollar index was softer and crude oil firmed -factors that tend to underpin the metal.
"Gold's feeble attempt at making positive headway overnight made a sharp U-turn, becoming a hefty slide as the trading day unfolded," Nadler said."Additional factors weighing on bullion were also seen in the more than200-point drop suffered by the Dow, and the implications that such a decline may portend for margin call liquidations and the resurgence of generalized risk aversion - both of which were negative factors in gold's spring-time slump."
Zarembski and Fearon also cited unwinding of carry trades. Carry trades occurwhen investors borrow money in a country with low interest rates and theninvest in other assets, including gold. Evidence of this unwinding is the strength in the Japanese yen and Swiss franc, said Fearon.
"Japan and Switzerland are currently the main sources of carry trades. As those trades are unwound, whatever investments implemented by those trades are taking a hit," he explained.
Worries about the U.S. sub-prime market persist, Fearon added.
"With those concerns, people are thinking the U.S. economy might slow more than currently expected, and that might bring down inflation concerns. That is probably also weighing on the precious metals."
Some investors buy gold and silver as a hedge against possible inflation.
Meanwhile, October platinum fell $2.80 to $1,328.10 an ounce, while Septemberpalladium edged 25 cents lower to $368.05 an ounce.
"It seems to be lockstep with gold," said a trader.
Nevertheless, platinum and palladium are holding up better than gold andsilver, he continued. The logical explanation, he continued, is the continued threat of a platinum supply threat in South Africa, where unions and several platinum-mining companies still have not reached settlements after a number of old labor agreements expired earlier this summer.
"There is no resolution at this point," said the trader. "Things still seemto be contentious. They (traders) are eying it. That is helping support the platinum and palladium prices, although they are lower."
A strong rupee, a sensex bounding past 15000, Indian companies making headline grabbing global acquisitions, the insidious influence of Indian films - these are the parts that add up to the whole - ie. Brand India and its rising profile. Cashing in on the timing are two new Brand India campaigns - the tourism ministry's "India Now" campaign and the "India at 60" campaign of the CII and the US India Business Council.
It's a potent mix of symbols - Shilpa Shetty - India's latest, de facto cultural ambassador and the Taj - the desi wonder of the world floating down the Thames. Both were playing their part in Brand India's latest marketing campaign. The purpose: to flag off the 'India Now' campaign - an initiative by the Mayor of London, supported by the Tourism Ministry of India. India Now may be preaching to the converted - but could still find first impressions hard to crack. As India is still being seen as the land of noise, colour and spicy food...all of which is true. Only, now there are more things to advertise!
Settlements (includes open-outcry and electronic trading): London PM Gold Fix: $670 versus $674.75 Wednesday Spot gold at 1:30 p.m. EDT: $663.15, down $12 from previous day; Range:$658.05-$676.90 December gold (GCZ07) $675.10, down $11.40; Range $666.30-$690 September silver (SIU07) $12.95, down 20 cents; Range $12.755-$13.235 October platinum (PLV07) $1,328.10, down $2.80; Range $1,320.70-$1,337.90 September palladium (PAU07) $368.05, down 25 cents; Range $364-$369
Rupee / US Dollar Forex Currency News, Gold in India, and The Sensex index on the Bombay Stock Exchange (BSE). Euro / Rupee and Yen / Rupee.
Labels: currency, dollar, forex, india, rupee, sensex, silver, stock market, us
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