ពត៌មាននិងការព្យាករណ៏តំលៃមាស​សំរាប់ថ្ងៃ០៩

Gold Extended Its Losses due to Profit Taking and Stronger Dollar

09 Dec 2010	1st resistance	2nd resistance	3rd resistance
Today’s resistance US$	1400	1419	1433
	1st support	2nd support	3rd support
Today’s support US$	1367	1352	1334
Today’s pivot point US$	1386

The Day’s Story:

Gold extended its losses on Wednesday as it continued to fall due to heavy profit taking inflicting a near term chart damage on daily charts. Stronger U.S dollar and high treasury yields also played their role in gold's demise. Higher yields make currencies more appealing asset to invest than gold. Market also reacted to speculation circulating in markets that Chinese Government will raise its key interest rate to control rising inflation this weekend. A Key reversal on charts suggest we may see further correction in gold prices but gold will remain well supported as long as Euro zone's debt crisis, QE3 and Currency debasement remain in the backdrop. Chinese rate hike, if announced anytime before the end of the year will be a big blow for gold prices and may send prices to new near-term lows. Gold has lost over 3% in last two sessions but is up by 26% this year and looks well set to record its 10th annual gain.

Stocks in U.S ended marginally higher on Wednesday as a rebound in bank shares offset weakness in commodities and concerns about rising treasury yields. The Dow Jones closed up 13 points at 11372 while S&P 500 finished 4 points higher at 1228 and NASDAQ rose 11 points to finish its day at 2609. Investors were also digesting the deal struck on Monday between President Obama and Republican lawmakers to extend Bush-era tax cuts for Americans earning more than $25000 a year. Meanwhile European debt saga still remains at the backdrop although it has calmed down a bit since ECB started buying European bonds. Stocks in Europe however, had a mixed day with Britain's FTSE 100 falling 0.2%, the DAX in Germany dipped 0.4% while France's CAC 40 bucked the trend and rose by 0.6% to finish the day.

Meanwhile, markets continue to speculate on China’s key interest rate hike which contributed to gold’s demise on Wednesday.  China imported 209.7 metric tons in the first 10 months of 2010, which equals to 7.4 million ounces of precious metal. For comparison, that figure exceeds the activity of the gold ETF, SPDR Gold Shares, the world’s biggest gold exchange trading fund, which added 164.36 tons, or 5.8 million ounces, in the same

time period. China has already hiked its rate in October and raised Reserve Requirement ratio for its banks twice in November in order to curb rising inflation. Some analysts are expecting China to raise its interest rate

as early s this weekend where others are expecting it early next year. If China decided to surprise the market before the end of this year that will be a bearish sign for precious metal and will trigger some profit taking and panic selling.

This week’s economic calendar is fairly light, with the trade balance and consumer confidence out on Friday. Consumer confidence could be given more credence, in a way to compare some of the early views toward holiday spending. European debt problems which were offset by some important economic releases last week may come to forefront once again. Bullion which has been hit by heavy profit taking in last two sessions after peaking to its all time high of $1431 an ounce will remain well supported due to ongoing European debt saga and fresh talks about possible FED’s QE3 measures. Although China’s move to stabilize inflationary pressure is bearish for gold as it reduces its appeal as a hedge against inflation but analysts believe any such move will not hurt gold prices to a great extent in medium term and there will always be buyers at the other end of a dip in prices.

U.S. dollar index rose for third day in a row and pressured Oil and commodities denominated in U.S currency. Euro pared all its intraday losses towards the end of the sessions and trimmed U.S dollar gains. U.S dollar’s recent gains are partly because of market’s realization that U.S economy’s outlook in 2011 will be improved provided the fiscal legislation bill is passed by the Parliament. Another view is by extending Bush-era tax cuts will force Government to borrow more which will hurt dollar’s prices in the long run. Gold and dollar’s inverse correlation turned positive for last two sessions as stronger dollar fueled bullion’s losses. Any relief in euro crisis, similar to what were seen during later part of last week, will push the euro higher and the dollar lower and be good for gold, as the two move inversely to each other. If a debt crisis flares up again and default is floated as an option for some countries, the euro could plummet in value and take gold with it. Safe haven buying, however, should create a floor of support for gold prices.

Gold prices could be more volatile towards the end of the year (similar to what we have been seeing in last few sessions) as profit-takers contend with "bargain-hunters" and those wanting to add gold to their portfolio before the New Year. During December, those traders selling gold future contracts must also deliver physical gold and the longs must pony up the cash which increases liquidity and volatility in the market. However, the end of the year traditionally brings with it less liquidity and greater potential for rapid shifts in price direction, meaning that gold could endure more setbacks before resuming its uptrend.

Recent Price Recap:

Gold price was boosted by Federal Reserve’s $600 Billion QE2 package in early November and crossed above

$1400 on November 8th as a reaction to that move. Price peaked to $1424 but entered a correction phase as some profit taking and book squaring sent prices to early 1300 levels. After a shallow correction, gold found support at the back of European debt contagion fears. Further support came as tensions between North and

South Korea escalated after North attacked a South Korean Island killing four marines. Gold cut most of its

losses last week but remain subdued due to concerns that China may raise its interest rate to curb rising

inflation. Stronger US dollar also put a lid on gold’s gains but Friday’s jobs numbers proved to be catalyst bullion had been looking for as investors seek refuge in the safety of precious metal and dumped U.S dollar. Further strength was found at the back of Fed Chairman’s comments which sent prices to their all time high level for two days in a row. Gold recent gains met with heavy profit taking and book closing by funds, diving below $1400 levels. A near term chart damage suggests market has topped in near term and some corrective pullback will test near term support levels.

Yesterday’s Price Action:

Gold price extended its losses after quickly rising to its intraday high of $1404.1 an ounce at the start of Asian trading hours. Gold landed in $1300 territory during that time period but recovered during the later part of Asian session. Gold tried to break through $1400 level during early European session but once again profit takers dragged the prices deep into red. A bit of seesaw price action was witnessed before U.S market open but a massive round of selling sent prices to as low as $1371.2 an ounce during early U.S session. Gold price cut its losses during later part of U.S session and closed at $1381.8 an ounce with losses of 2% for the day.

Other Metals:

Silver futures for March delivery closed down 152 cent to $28.25 an ounce on Wednesday.

Platinum futures for January delivery fell $23.80 to $1,681.40 an ounce on NYMEX.

Palladium futures for March delivery fell $9.75 to $728.95 an ounce.

N.Y. Copper for March delivery closed up 5 cents to $4.10 a pound on Wednesday.

Gold (News and Views):

      February Comex gold closed down $25.80 at $1,383.20 an ounce on Wednesday.

      The London P.M. gold fixing was $1,385.50 on Wednesday compared to its previous P.M fixing $1,420.00.

      The world’s largest gold exchange-traded fund, New York’s SPDR Gold Trust, said its holdings fell to 1297.726 tons on December 07 down from 1298.030.

      The dollar index, which measures the U.S. currency against a basket of six major currencies, rose by 0.05 to 79.99 on Wednesday.

      Crude Oil for January delivery fell $0.41 to $88.28 on Wednesday on New York Mercantile Exchange.

      Gold hit its true peak on Jan. 21, 1980, when it rose to $825.50 an ounce. Adjusted for inflation in 1980 dollars, that translates to an all-time record of $2,184.08 an ounce, in 2010 dollars.

      GoldCore looks for silver to outperform gold, with the gold/silver ratio set to target 40, the level from 1998 when Warren Buffett was accumulating the metal. The ratio measures how many ounces of silver it takes to buy an ounce of gold, and a decline in the number means silver is outpacing gold. “The gold/silver ratio at 48.1 is sustainable as in gold and silver's last bull market in the 1970s, the gold to silver ratio was between 18 and 48 and averaged around 30,” GoldCore says. “In the last 40 years, a very significant

amount of silver has been consumed in consumer and industrial applications. Gold's consumption is tiny in comparison and this would suggest that the very high gold/silver ratio of the 1990s and up until recently

may have been a historical anomaly.”

Factors Affecting Gold Price Yesterday:

Comex gold and silver have staged technical reversals lower one day after gold hit a record high and silver hit a 30-year high, says Mike Daly, gold and silver specialist with PFGBest. “Rumours of the U.S tax extension package not having enough votes to pass helped to extend yesterday's negative settlement,” Daly says. “Also, the continued concern that The Peoples Bank of China will once again raise interest rates has traders on edge and eager to take profits when the opportunity presents itself.”

"Momentum traders [are] extremely active," says George Gero, senior vice president at RBC Capital Markets. "Recent buyers are more skittish [also] if momentum fades. Protection of positions so quickly means many recent buyers are quick traders ... [there are] lots of nervous longs in the market now."

Profit-taking was also at play, analysts said. “It came up so far and so fast you definitely saw some profit-taking” during Wednesday’s session, said Charles Nedoss, a senior market strategist with Olympus Futures in Chicago.

“There remains some demand to buy on dips after a drop in the past couple of days,” said Lee Joon, a senior trader at Woori Futures Co. in Seoul. “We can hardly say gold’s rally is over. The factors that have driven up gold prices such as an asset for wealth protection and an alternative to a weaker dollar are still there.”

Gold Future Outlook:

Spot gold has strong hourly technical chart support at $1,370 to $1,368 an ounce, says Andrew Chaveriat of BNP Paribas, following Wednesday’s bearish key reversal. “While not expected, gold's bearish daily momentum, intensified by bearish divergence, does risk breaking of critical $1351 support (from the) late-November base, which would signal a medium-term reversal,” he says.

Holdings in the 13 global gold exchange-traded funds monitored by Goldessential.com slipped by 1.26 metric tons Wednesday as profit-taking set in after the metal hit a record high. “Thus far, these ETF outflows are insignificant,” says Matthias Detremmerie, founder of Goldessential.com, adding that the dip in gold prices “seems to be a healthy consolidation phase after congestion above $1,430 proved enough for some to pick profits.” Detremmerie says Comex February gold futures could soften further toward $1,370 in the short run, should they fail to regain $1,408-$1,410 resistance.

Despite the losses Wednesday, gold and other metals are still on an uptrend, Nedoss said. In addition to ongoing concerns about the U.S.’ fiscal health and the extent of Europe’s sovereign-debt crisis, there are threats of inflation worldwide, he added.

Rohit Savant, senior commodity analyst at CPM Group, predicts that "this month you might see some

consolidation or short-term weakness [but] any weakness in price would be very short-lived ... for a stronger bull move [in gold] it will probably be January."

“We expect gold physical demand to prevail on dips into January,” Walter de Wet, head of commodity research at Standard Bank Plc in London, wrote in a Dec. 8 report. “Indian demand should remain positive until at least mid-December on the back of the wedding season.” India is the biggest consumer of gold.

Brian Hicks, co-manager of the U.S. Global Investors Global Resources Fund, says a rate hike could hurt gold prices in the short term "but it's important to remember why China is raising interest rates and that's because of their concern about inflation and obviously gold does well in inflationary environments." Hicks predict that a rate hike in China would actually be a positive for gold in the long term.

Technical Analysis (By Jim Wyckoff):

Technically, February Comex gold futures prices closed nearer the session low Wednesday. There was also strong follow-through selling pressure in gold on Wednesday, from solid losses seen Wednesday, and a significantly bearish "key reversal" down was confirmed on the daily bar chart. This is one early clue that a near-term market top is in place. However, a "near-term" market top does not at this point suggest that a major or longer-term market top is in place in gold. The key reversal does at least suggest prices are due for a decent downside correction in the near term--possibly into the end of the year.

Importantly, price uptrends on the charts are still fully in place for gold. The gold market bulls still have the overall near-term technical advantage. A four-month-old uptrend is still in place on the daily bar chart.

Bulls' next near-term upside technical objective is to produce a close above strong technical resistance at Wednesday's all-time high of $1,432.50.

Bears' next near-term downside price objective is closing prices below solid technical support at $1,350.00. First resistance is seen at $1,390.00 and then at $1,400.00.

Support is seen at Wednesday's low of $1,372.10 and then at $1,360.00.

Wyckoff's Market Rating: 7.0.

Daily Gold and Silver Expected Range:

Gold: US$1365- $1405

Silver: US$27.75 - $29.05