Malaysia Gold Price Likely To Correction In Nov

Base on the chart, Malaysia Gold Price is about to correction and likely to happen in Nov before up again in Dec 2009. For short term investor like me, I sale out first now and buy back later but if long term investment strategy, gold price still and likely to move up higher by next year 2010.

Malaysia Gold Drop With USD Value Up

US equities sold off yesterday and Gold were lower. While risk appetite has been limited yesterday, the US bond market is doing fine. US treasury yields have not declined (they usually do, when risk aversion rises). Although the bias has to lie with risk appetite remaining low yesterday, there could be a turnaround in the US — and some resultant short-covering if economic data is positive. Watch out for the CaseShiller House prices and US Consumer Confidence data in the US.

Most investor observed buying appetite in the physical gold market yesterday. But physical buying is being overshadowed by investment selling of gold. The break lower yesterday, which we were looking for all of last week, pushed gold as low as $1,037. Gold is presently holding firm at $1,040, and we have seen some buying interest at these levels. Technically, gold could test $1,024, from where we see a recovery. Resistance is at $1,045 and $1,048.

Back to Malaysia physical gold market sale is drop compare last year, this may be due to high gold price. With USD value moving up, Malaysia Gold price will drop and base on the chart RM113 level likely to give good support. However if RM110 level broken, gold will drop into bear market. I think this level is unlikely to broken but if it did so is a good entry to buy gold to keep.

Gold Price Drop Due To USD Value Stronger

Gold price start to drop due to USD valur stronger. If base on the chart, Gold is about to enter correction same thing happen to DJ index and FBM KLCI. I think the month of Nov is a good month to buy in into share and gold market.

5.7% y/y increase in Indian physical gold sales during this year’s Diwali

Gold has come under pressure last week, slipping from $1,064 to $1,057 as the greenback strengthened from $1.5064 to $1.4991 against the euro. With gold also closely tracking crude oil prices (the 5-day rolling correlation between front-month WTI crude and spot gold at 0.64), WTI crude’s dip, from $81.80/bbl to $81/bbl in electronic trade, also weighed on the gold
price.

However, gold could benefit from positive news on the demand side after the World Gold Council reported a 5.7% y/y increase in Indian physical gold sales during this year’s Diwali week (12-17 October) but Investor holdings in the by Goldessential monitored gold-backed exchange-traded funds were seen decreasing 17.293 tonnes (555,973 ounces) or 1.07 pct in the week from October 15th up to and including October 22th, in-house calculations based on official data showed on Friday. Base on the chart gold primary support and resistance are at $1,054 and $1,066 respectively for this week.

Buying Price Dips Remains My Strategy

Gold look weak after they failed to retain their intra-day highs yesterday. Gold scrap is still entering the market, and gold is meeting strong resistance on approach of USD1,070. Should the dollar show a bit more strength, there could be a downward correction towards USD1,040 in the gold price. I do not advise adding new longs at the current gold price. However, buying price dips remains my strategy. Gold support is at USD1,050 and USD1,040, and resistance at USD1,064 and USD1,075.

Gold Investment Account as at 21/10/09 3:51 PM

	Selling Price	Buying Price
1 gram	RM 117.8200	RM 113.2500

Speculative length still rising

Risk appetite continues apace. While growing down side risk to gold, the amount of liquidity flowing to precious metals is likely to limit any sell-off. Of note is the substantial decline in the correlation between precious metals and the US dollar in recent days (the dollar has been trading around $1.4900 against the euro for the past few days). Most of the investor doubt this correlation will remain low, and a weaker dollar should continue to support precious metal prices.

Upside for gold is still limited. Continue to see scrap gold entering the market. At the same time, there was also some ETF gold selling. ETF Securities reported selling of 8.06m oz on Friday. While investor do not expect large-scale ETF selling, there is clearly some resistance in the gold market at the moment. As a result, I do not advise adding any new long positions. A correction towards USD1,020-USD1,030 could be a buying opportunity. Support is at USD1,040 and USD1,030, with resistance at USD1,060.

There is still a clear disparity between speculative activity in the gold market and what we observe in the physical market. Speculative activity remains high on the back of dollar weakness.
Speculative length for gold continues to rise. According to CFTC data, non-commercial long positions have jumped 69 tonnes, from a week earlier, to 982.6 tonnes. At the same time, the noncommercial short position has risen only 1 tonne, to 80 tonnes. This leaves the net non-commercial position at 902.6 tonnes. This position is more than double the longs have seen in April when the equity markets started their recovery, and a massive 735 tonnes higher than the lows reached in November last year. Net speculative length now accounts for 42% of total open interest — the highest level in at least two years.

The CFTC figures show a very bullish speculative market. However, over the past two weeks, investor continued to witness a very weak physical market (refer to Commodities Daily of 14 October 2009). Continue to see scrap flowing to the market at current price levels. As a result, we believe gold will find it difficult to move higher. A gold price closer to USD1,030 might see physical buying return. While most of the investor still believe gold could reach USD1,100 in Q4:09, they are increasingly seeing strong resistance from the physical market. For the first time in many weeks, investor believe that there should be a price correction towards USD1,020-USD1,030 before the gold price will move higher again.I think buy dips to make better profit.

Precious metals are resisting a move higher, and it appears some consolidation is in the making.

Risk appetite remains in place: the dollar continues to weaken this morning; equities performed very well yesterday, US treasury yields are higher, and high-yielding currencies are stronger. However, commodities have failed to respond. In the futures market, many of the commodities have very long spec length, which is possibly adding to reluctance to add further long positions. Looking at the broader market, upside bias might remain. However, US will have a data-heavy day today, which might restrain the markets.

US CPI is due for release; most of the investor expect a further y/y decline. M/m, it should show a small rise. But overall, the data should show very few inflationary pressures. In the US, the market continues to price a very low probability to any rise in interest rates. According to the futures market, there is only a 32% prob. of a 25 bps rise by June next year. The options market sees this probability at only 5%.

So, from a liquidity perspective, this remains supportive of Gold. At current price levels, there is little appetite in the physical gold market. Scrap selling continues, which is adding to the resistance. Expected resistance to remain in place until the dollar weakens further. Gold support is at USD1,050 and USD1,040, with resistance at USD1,070 and USD1,077.

Back home, Malaysia gold price drop back to 1st support line at RM113 per gram after hits high at RM117 per gram. However with closing to year end physical gold in Malaysia usually increasing so this will give Malaysia gold price a support at RM113 level. As international gold price likely to move sideways, Malaysia gold price may also like follow.

Public Bank Gold Investment Account as at 15/10/09 3:51 PM

	Selling Price	Buying Price
1 gram	RM 116.9700	RM 112.4300

Physical gold buying persists

While dollar weakness is inflating the gold price in dollar terms, most of the investor also see support for gold from the physical market. While the flows they track currently signal a possible consolidation, they still remain bullish.

When gold breached USD1,000 in early September, physical selling went neutral, as can be seen by our physical index moving closer to zero. A value for the index above zero shows net buying. A value below zero shows net selling. The higher the value (in absolute terms), the greater the buying or selling pressure (from the physical flows we track). However, buying momentum spiked sharply just before you saw the last rally towards USD1,060 (at the start of October). At this stage, gold flows (with gold at USD1,060-USD1,070) indicate that the physical market is neutral — spelling a possible consolidation for gold at this level.

However, I believe buying momentum should turn positive again, given that Q4 is jewellery season. As a result, I believe the current rally still has some legs (independent from high investment demand). Most of the investor estimate that Q4 seasonal demand is 3x higher than that of Q3 (after accounting for price and currency effects). Looking forward, we are mindful of what can happen in February/March 2010 (a very weak period for seasonal de- Walter de Wet Leon Westgate Source: Global Markets Research mand). From what we have seen at the start of 2009, physical selling could be intense. Potential scrap flows may neutralise some of the dollar weakness we expect in Q1:10.

Gold continues to hit new highs, reaching USD1,065

Technical Chart View

Gold continues to hold onto the recent price strength gaining about USD9.00 on the day to settle around USD1056.50 per ounce. Today’s price action bodes well for continued upward movement as the week progresses. The measured move for the weekly chart shows USD1105. This is the distance from the triangle breakout at USD965, which would equal the correction distance from 1006 (Feb 16) to 866 (April 20). Suggest holding long positions while 1024 holds on a close basis.

Gold continues to hit new highs, reaching USD1,065 this morning. Most of the report still looking for USD1,100 although they expect a bumpy ride. Buying the dips remains most of the investor preferred strategy. Gold support is at USD1,050 and USD1,042 and resistance at USD1,065 and USD1,070.

USD1,100 Appear To Be The Next Gold Price Targets.

Gold reached a record high of USD1,044 in New York trade yesterday. Initially the move was technical in nature, however volumes picked up strongly, lending weight to the rally. That impetus has seen gold manage to hold its ground and push higher still this morning with the yellow metal climbing above USD1,048/oz. With the metal’s previous technical charts now thrown in the dustbin, the round figures of USD1,050 and then USD1,100 appear to be the next targets.

On the investment side, the SPDR gold ETF added 2.441 metric tonnes to its gold investment holdings yesterday.

Public Bank Gold Investment Account as at 07/10/09 3:51 PM

	Selling Price	Buying Price
1 gram	RM 117.5800	RM 113.0100

Gold fair value estimated

The gold price has climbed higher in Q3:09 and early Q4:09 supported mainly by a weaker US dollar and through increased ETF investment holdings. On the investment side, holdings by
the SPDR Gold Trust ETF have increased 0.4% w/w to 1,098 metric tonnes.

Despite being positive for gold, the rate of increase in gold investment holdings is relatively slow. This perhaps suggests that weak global fabrication demand and low Asian physical demand
are starting to impact on sentiment after all. Although increased Indian physical gold demand has seen the domestic Indian gold price trade at a USD0.30/oz to USD0.40/oz premium to London, ahead of the Diwali festival, physical gold is still trading at a discount in most other locations in the Asia- Pacific region.

Of note, the 1-week rolling correlation between spot gold and oil has contracted from 91% on Friday to 25% last week. Gold’s rolling correlation with the NewEdge CTA index, which most of the report use to proxy investment flows, has also fallen from 73% on Friday to 12% last week. The rolling correlation between the trade weighted US dollar and spot gold price has increased from –66%, on Friday, to –91%. Most of the investor believe increased importance of the US dollar and reduced influence of oil and investment flows could increase short-term gold price volatility.

Base on Standard Bank report, fair value estimate for the gold price, which is a short-term 1-month outlook, has increased 4.7% m/m to $993/oz in October. On that basis, plus given the fact that physical demand is weak, they see the potential for a short-term correction in the spot gold price from last week levels of over $1,020/oz. They caution however, that with the dollar remaining the dominant force driving prices, gold’s relationship to its fundamentals remains very much at arm’s length.

















Malaysia Gold price also bounds up high and hits RM116 per gram before turn down. Base on the chart Malaysia gold price may hits news high in this month so this is the time to get profit.

Gold edged up to US$1,018.85 (RM3,566.70) an ounce due to Gulf oil report

The dollar skidded against the euro and the yen today after a British newspaper reported that Arab states were in talks to end using the dollar for oil trading, but Asian shares rose as US services sector data lifted investors’ mood.

The dollar slid to about US$1.4709 against the euro, from US$1.4664, and to as low as 88.97 yen, from 89.40, after the report in Britain’s Independent newspaper.

Citing unidentified sources, the paper said Gulf Arab states were in secret talks with Russia, China, Japan and France to replace the dollar with a basket of currencies and gold for trading in oil within nine years.

Gold consuming market, is gaining momentum ahead of the India Diwali festival

Friday’s bearish US non-farm payrolls data saw gold fall from USD997 to USD986 in early New York trade before recovering to USD1,007 in late afternoon trade as the dollar weakened from USD1.4521 to USD1.4631 against the euro. Continued US dollar weakness against the euro this morning helped gold find decent support at USD1,000 in Asian trade before the metal pushed on up to USD1,007 in European trade.

Of note, Physical gold demand in India, the largest gold consuming market, is gaining momentum ahead of the country’s Diwali festival. The gold price in India is trading at a premium to London spot prices—highlighting increased Indian demand. This may continue to lend background support to prices. On the investment side, gold has benefited from a 1.22 metric tonne increase in the SPDR Gold Trust ETF’s investment holdings on Friday.