Silver eyes 30-month high
London, Sept. 17: Gold retreated from record highs on Friday, as a firmer dollar tempered the momentum, although concerns about further quantitative easing in the United States cushioned prices.
Meanwhile, silver was supercharged, benefiting also from gains in prices for industrial metals to test the $21 mark. A break above $21.24 would open the way for prices to hit levels last seen in October 1980.
Spot gold hit an all-time high of $1,282.75 a troy ounce before easing to a bid at $1,276.50, compared with $1,272.20 late in New York on Thursday. It has gained more than $100 or 8.4 per cent since the start of August.“It’s partly a currency move. There’s investor nervousness about monetary policy around the world since the yen intervention,” said precious metals strategist, Mr Matthew Turner, of Mitsubishi Corp.
“A lot of people are sensing a race to the bottom by central banks to print more of their currency.”
The dollar gained ground against the euro on Friday on talk of an Irish bank in trouble, but remains close to one-month lows against a basket of currencies. Dollar sentiment has been damaged by speculation of more quantitative easing from the US Federal Reserve. Quantitative easing is a process by which central banks attempt to pump money into economies by printing money and buying bonds.
Meanwhile, silver was supercharged, benefiting also from gains in prices for industrial metals to test the $21 mark. A break above $21.24 would open the way for prices to hit levels last seen in October 1980.
Spot gold hit an all-time high of $1,282.75 a troy ounce before easing to a bid at $1,276.50, compared with $1,272.20 late in New York on Thursday. It has gained more than $100 or 8.4 per cent since the start of August.“It’s partly a currency move. There’s investor nervousness about monetary policy around the world since the yen intervention,” said precious metals strategist, Mr Matthew Turner, of Mitsubishi Corp.
“A lot of people are sensing a race to the bottom by central banks to print more of their currency.”
The dollar gained ground against the euro on Friday on talk of an Irish bank in trouble, but remains close to one-month lows against a basket of currencies. Dollar sentiment has been damaged by speculation of more quantitative easing from the US Federal Reserve. Quantitative easing is a process by which central banks attempt to pump money into economies by printing money and buying bonds.
http://www.deccanchronicle.com/business/silver-eyes-30-month-high-828
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September 17, 2010
Dollar may fall; investors watch for Fed, yen
* All eyes on Fed policy meeting on Tuesday
* Downside in dollar/yen seen limited
* Euro zone worries back on investors' radar
NEW YORK, The dollar may fall next week as investors look to the Federal Reserve for clues about the prospect of further easing to spur the U.S. economy, but its downside versus the yen is limited after Japan's recent massive yen sales.
Speculation the Fed might resume large-scale asset purchases later this year has pressured U.S. Treasury yields and pushed the dollar down 1.5 percent this week against a basket of currencies .DXY, the biggest drop in two months.
While most analysts expect the Fed to renew its pledge to keep monetary policy accommodative, but not to announce any new steps when it meets on Tuesday, investors will scrutinize the accompanying statement to try to determine if the central bank will take action in coming months.
"There's been a lot of speculation that the Fed will increase their quantitative easing activity over the next few months," said Jessica Hoversen, fixed income and currency analyst at MF Global in Chicago. "The market is going to be looking for the Fed to say something in their statement about policy."
Such speculation could continue to pressure the dollar against the yen even after Japan sold around $1.8 trillion yen ($20.98 billion) on Wednesday in its first currency intervention in six years in a bid to stem currency strength.
Daniel Katzive, a currency strategist at Credit Suisse in New York, said while the intervention probably reduces the risk the pair may overshoot below 80, he would not be surprised to see another test below 85 in the near term.
"Dollar/yen is going to stay very heavy despite the intervention because yield spreads remain very compressed," he added.
The dollar last traded little changed at 85.74 yen JPY= in New York. Resistance was seen at just under 86 yen, followed by 86.30, the bottom of the resistance cloud on its Ichimoku chart, a technical indicator. Traders also cited stop-loss buy orders above 86.00 and 86.35.
Key U.S. data releases next week include housing starts, building permits, existing home sales and durable goods.
"As long as U.S. data doesn't disappoint massively, this may be one of the cases in which central bank intervention may work in the near term," Schlossberg said.
Jonathan Xiong, director and global investment strategist at Mellon Capital Management, said the firm's models "see more risk in the yen" and the firm may cut even further its long yen positions. Xiong is part of a team that oversees $28.6 billion in assets in San Francisco.
Morgan Stanley said dollar/yen has seen the bottom and may rise to 93.0 by the end of the year.
Meanwhile, renewed worries about the euro zone's debt and banking troubles will also be in focus after Irish/German spreads widened amid fears about Ireland's banking sector.
"There is more bad news coming down the pike with regards to peripheral euro zone sovereign risk, so what remains to be seen is how resilient the euro will prove," said Win Thin, currency strategist at Brown Brothers Harriman in New York.
