Finotec News Archive - September 06 2007
US gold shoots over $700, ahead of Fri payrolls
Gold was strong along with other metals as one trader pointed out funds renew their start-of-month purchases around the fourth business day.Rodian Rahnayev 
06 September 2007
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U.S. gold futures prices rose above a key psychological target of $700 an ounce to a four-month high on Thursday as funds renewed their buying ahead of expectations for a weak U.S. employment report on Friday, traders said.
"I think it's people who are buying gold in anticipation of a disappointing employment number tomorrow. Payrolls are expected to be weak and would argue for a rate cut and therefore flight-to-quality buying of gold," a trader said.
Technical gold buyers had been aiming for the key goal at $700 an ounce since Tuesday's rally. The upper band of December gold's range dating back to July 2006 at $720 an ounce marks the next big target for that contract.
Gold was strong along with other metals as one trader pointed out funds renew their start-of-month purchases around the fourth business day.
"It's the fourth trading day of the month and funds traditionally get in on this day. The open interest has really come off in the last month. You have crude oil up to $77. You have the monetary crisis. And people are piling in. It's just about time," "We're talking about under-ownership of gold. The open interest in gold futures is really low and it's starting to come back up. That's what's pushing the price up," he added.
On Friday at 12:30 GMT, August U.S. payrolls data is due and analysts project tepid gains. If jobs growth comes in weak as expected, it may support calls for the U.S. Federal Reserve to cut the key overnight interest rate to 5.0 percent from 5.25 percent. A rate cut tends to weaken the dollar, making gold cheaper for holders of other currencies. A steep rise in oil prices helped gold, which is seen as a hedge against oil-led inflation.
Finotec Analysis Team
06 September 2007
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