Gold's Losing Streak Ends at Four
09/13/06 - 03:30 PM EDT
Simon Constable
Updated from 11:41 a.m. EDT
A choppy day trading saw gold snap its four-day losing streak with a weak greenback winning out over rumors of heavy central bank selling. Benchmark contracts for December delivery of gold whipsawed their way through the session to close up $2 at $596.50 an ounce on the Comex division of the New York Mercantile Exchange. Late session dollar weakness against the euro may have provided the boost needed to take gold from negative territory midday to positive by the session's end. The euro was trading at $1.2702, compared to $1.2691 a day ago. The dollar was also weaker against the yen, recently buying 117.53 yen, down from 117.95 yen late Tuesday, after remarks a day ago that Bank of Japan "policy makers remain committed to gradually raising interest rates," according to wire service reports. Investors frequently switch into currencies in anticipation of higher interest rates, and gold tends to move inversely with changes in the dollar. Some observers, however, downplayed the mini rally. "I think after so many straight days of down it's little more than a knee-jerk reaction," says longtime market watcher Peter Grandich, editor of The Grandich Letter. "Gold is likely to remain on the defensive through the end of September, as it's becoming widely believed that a good chunk of the selling is from the European Central Bank." The ECB may be trying to exhaust the remainder of its sales quota that expires Sept. 26. Until then Grandich, a strong bull for gold over the longer term, expects a trading range of $575 to $620 an ounce. Shares of the exchange-traded funds that hold gold bullion, streetTRACKS Gold Shares(GLD Quote - Cramer on GLD - Stock Picks) and iShares Comex Gold Trust(IAU Quote - Cramer on IAU - Stock Picks), were gaining slightly, mid-afternoon.
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