Gold prices matched a rally in crude oil late in New York, driven by a shortfall in US oil inventories. But the metal ticked lower again in today's Asian session after US retail data did what the Federal Reserve won't and steadied the Dollar.
Not even housing sales falling year-on-year can slow the march of US consumers towards Christmas, said the Commerce Department. They spent 1.0% more at the malls in November. Analysts surveyed by Bloomberg News had expected a mere 0.2% rise.
"You'd better go home and celebrate Christmas early," said one gold dealer to Reuters in Hong Kong, as Dollar buyers showed up and gold dipped. "I don't see any support from oil," he added, giving a range of $624 to $632 for the day. Other traders continue to watch $620, a level gold has bounced off 3 times in the last week.
"We see gold very much range bound," said Investec Australia in a daily report, "with a reluctance to trade above $630 [and] more liquidations with a move down towards the $620 level very likely."
But outside the dealing rooms, gold's strong fundamentals keep attracting new friends. "Investment and central bank demand [in 2007] is likely to provide significant upward impetus," says a quarterly report from BNP Paribas, "as alternatives to the US dollar are sought. Japanese investment will return to the market." A note from Merrill Lynch says that gold is the only metal unlikely to see any meaningful increase in mining supply next year.
Just this week South Africa reported that gold output fell 7.1% year-on-year in October while total minerals production rose by 2.5% by volume. Britain's one-million-ounce miner, Peter Hambro, is also set to lose future production unless it can persuade the Russian government to reinstate gold licences revoked at the end of November.
"There are growing fears over apparent moves by Russia to seize back mineral assets controlled by foreign investors," reports the BBC. No fooling! Click here for more Kremlin intrigue...and what it might mean for resource investors...