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CBSMarketWatch reports on Ted Butler''s silver campaign at CFTC
Gold futures close up more than $7;
Metals futures rally; mining indexes
at multi-week highs
By Myra P. Saefong
May 19, 2004
Gold futures logged a gain of more than $7 an ounce
Wednesday, closing at their highest level in nearly
two weeks as a 5 percent pullback in prices over t
he past month and fresh weakness in the U.S. dollar
rekindled investor interest.
"Dollar weakness, inflation fears from higher energy
costs, and reports that the economies around the
globe, such as Japan, are expanding are all
supportive for the precious metal," said John
Person, editor of The Bottom Line newsletter.
Gold for June delivery climbed $7.10 to close at $383
an ounce, after touching a high of $383.50 on the
New York Mercantile Exchange. Prices haven't
closed this high since May 6. A month ago, the
benchmark Nymex contract traded above $401.
"Investors are looking at gold as a flight to true
quality and are looking for bargains now," said
Kevin Kerr, editor of Kwest Market Edge.
From here, Kerr expects the precious metal to
see "periodic profit taking" followed by "a move
higher on steady buying -- just as a healthy bull
Brien Lundin, editor of Gold Newsletter, believes
the gold market is "seeing a battle between
short- and long-term investors."
"The hedge funds and other speculators dominate
the price of physical gold, and right now they are
making hair-trigger, reflexive decisions based purely
on the prospects for higher interest rates," he said.
In foreign-exchange action, the yen gained against
the dollar and the euro after Japanese stocks
climbed 2.5 percent, increasing demand for Japan's
"The U.S. dollar is completing its bear market rally
and is going much lower," predicted Peter Grandich,
editor of The Grandich Letter. "Throw in bullish inflation
and geopolitical factors and gold is now set to resume
its climb back over $400 and eventually to $500," he
Meanwhile, reports that Japan's economy is showing
signs of strength "may encourage Asian bullion
purchases," said The Bottom Line's Person. "This is
one more catalyst that is helping the bullish
And "seasonal traders also realize gold has a tendency
to rally in May," so the market has shown strong
support at the $370 to $375 level, he said.
Person also notes that gold prices have fallen nearly
$60 from the $433 peak seen on April 1, retreating all
the way to a recent low of $371.30 on May 10.
"Thoughts are, if the Fed does not raise rates as
aggressively as perceived, then this is a good value
point for investors," he said.
Elsewhere in metals futures trading, July copper
closed up 4.3 cents to $1.1965 per pound. July
silver tacked on 24.7 cents to close at $5.927 an
July platinum rose by $5.30 to end at $805.30 an
ounce and June palladium tacked on $5.30 to
close at $245.50 an ounce.
As of late Tuesday, copper supplies were down
2,071 short tons at 146,556 short tons, according
to Nymex. Silver stocks were up 154,656 troy
ounces at 120.4 million troy ounces.
Gold inventories stood at 4.33 million troy ounces,
up 56,030 troy ounces from the previous day.
Strength in metals futures lifted metals mining shares
and sent key indexes for the sector to their highest
levels in as much as three weeks.
"The bottom line is that gold stock investors feel that
if we are not at the bottom for this gold-price correction,
then we are near it," said Gold Newsletter's Lundin.
Tracking the sector as whole, the Philadelphia Gold
and Silver Index rose by 1.8 percent to close at 84.49
and the Amex Gold Bugs Index climbed 1.7 percent to
end at 186.39. The two indexes haven't closed at levels
this high in two weeks.
The CBOE Gold Index also tacked on 2 percent to
close at 74.87. It's the highest closing level for the index
since late April.
Among the biggest index-component gainers, shares of
Freeport-McMoRan Copper & Gold climbed nearly 4
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