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Gold resumes bull run; copper ends above $3
Gold gains almost 6% for the week; silver recovers from a two-week low
E-mail | Print | | Disable live quotes By Myra P. Saefong, MarketWatch
Last Update: 4:42 PM ET Apr 21, 2006


SAN FRANCISCO (MarketWatch) -- Gold futures climbed 2% Friday to recoup almost all of the previous session's loss, silver recovered from a two-week low and copper rallied above $3 a pound to close its highest level on record as analysts remained upbeat about longer-term prospects for the metals market.
"Although gold remains vulnerable to at least another bout of selling as we head into next week, the fact that it erased Thursday's losses demonstrates (for the time being) the fact that this bull is alive and kicking," said Jon Nadler, an investment products analyst at bullion dealers Kitco.com.
"For the sixth week in succession, traders refused to go home without the protective cover of gold in their arsenal," he said.
Gold for June delivery rose $12.40 to close at $635.50 an ounce on the New York Mercantile Exchange, rebounding from a $12.90 pullback on Thursday. It closed up 5.9% from last Thursday's close, which was the final trading day for last week.
"Iran's continuing stubborn stance, Russia's back-pedal posture against Iranian retributions, $75 per barrel oil, and continued worries about the day of reckoning for the dollar outweighed the nice feelings that most profit-takers experienced on Thursday," said Nadler.
Overall, analysts remain bullish on gold, describing Thursday's price action as a normal correction that won't disrupt a potential price move toward $700 an ounce.
While Thursday's correction is "positive," gold remains "vulnerable ... and could potentially dip back to $585," said James Moore, an analyst at TheBullionDesk.com.
But with little change in the Iran/U.S. situation and high oil prices "safe-haven and anti-inflationary hedgers still view gold as a sure bet with the longer-term bull trend still firmly intact," he said in a note to clients. See Futures Movers.
On track for $700
"This could very well be a bounce before another wave of selling, yet some investors came to their senses during their sleep and realized with oil hitting fresh record highs and a weakening U.S. dollar, the pullbacks have been excellent entry opportunities," said Peter Spina, an analyst at GoldSeek.com.
"The precious metals markets have recovered from every one of these sharp falls over the past several years and this is one is no exception either," he said.
"Now, the question remains as to how long before we return back on our way to $700," he said. Spina doesn't expect any sustained move below the $600 mark for gold.
Emanuel Balarie, senior market strategist at Wisdom Financial sees it a bit differently, saying a pullback below the $600 level could be triggered by "some heavy profit selling."
However, "pullbacks and consolidations along the way are good for the long-term movement of this gold bull market," he said, adding that these serve "the purpose of shaking loose speculators and short-term traders that do not believe in the longevity of this bull market."
"In either case, I still expect gold prices to now break $700 before the end of the year," Balarie said.
Canada's National Bank Financial raised its gold price forecasts earlier Friday, citing a range of new and old factors it expects will lead to more gains. Analyst Tanya Jakusconek raised her 2006 and 2007 forecast to an average of $600 from the previous estimate of $550.
Copper, silver score
Also on Friday, copper futures scored their highest close on record, as traders continued to bet on growing industrial demand, especially from China.
May copper climbed to a record $3.145 before closing up 17.85 cents, or 6%, at $3.1405 a pound. The contract's up 11.5% from the end of last week.
"Copper continues to defy gravity and crush bears like me," said Peter Grandich, editor of the Grandich Letter. "There's no rhyme or reason for it -- but tell that to our margin calls."
Traders have been "keeping a keen (and envious) eye on the copper market which, apparently, does not consider the laws of gravity to apply to it," said Nadler.
"The intensity of use of all commodities across the spectrum has been a key contributing factor to the bull phase unfolding in the base- and precious-metals pits, he said. "China appears determined to get a firm lock on key supplies of oil, copper, steel, as well as possibly inclined to add more gold to its reserves -- in a move that would further bolster the yellow metal and chip away at the hegemony of the dollar as a reserve asset."
Meanwhile, silver prices bounced higher following Thursday's nearly 14% drop.
May silver closed up 44 cents, or 3.5%, at $12.965 an ounce, but not before touching a two-week low of $12.15 during the session. Futures prices reached a 23-year high of $14.575 on Wednesday. They're up 0.9% for the week.
"Silver has good interest around $12, but $10 remains in the cards," said GoldSeek.com's Spina.
Silver has rallied strongly since the beginning of the year in anticipation of the launch of a silver exchange-traded fund, currently in registration by Barclays. The ETF is expected to strongly boost physical demand for silver.
"Follow-through selling in the current volatile market could see silver dip to $11.25-$11.50, but with ETF speculation still rife funds/speculators will still be keen to buy dips," said TheBullionDesk.com's Moore, who's based in London.
Nymex announced margin changes for its gold, silver and copper futures contracts as of Friday's close.
Margins for the gold futures contract increases to $2,250 from $1,750 for clearing and non-clearing members and to $3,038 from $2,363 for customers, Nymex said. For silver, it's up at $4,500 from $3,750 for clearing and non-clearing members and to $6,075 from $5,063 for customers. And copper's increases to $4,000 from $3,750 for clearing and non-clearing members and to $5,400 from $5,063 for customers.
Rounding out Friday's Nymex action, July platinum moved up $30.40, or 2.7%, to $1,139.20 an ounce after a record of $1,140.90. The contract gained 4.6% for the week. June palladium closed at $359.80, up $9.90 for the day and up 3% for the week.
On the supply side, copper inventories were down 267 short tons as of late Thursday, according to Nymex data. Gold and silver supplies were unchanged, at 7.51 million troy ounces and 124.7 million troy ounces, respectively.
Metals indexes up more than 6% on week
The renewed rally among the metals futures carried over into the major indexes that track the sector, prompting the benchmarks to post hefty gains for the day as well as the week.
The Amex Gold Bugs Index (HUI : amex gold bugs index equal-$ weight
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Last: 373.68+14.28+3.97%

4:03pm 04/21/2006

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HUI373.68, +14.28, +4.0%) tacked on 4% to close at 373.68, just shy of a record set at 385.37 on Wednesday. The benchmark dropped 6.7% on Thursday, but still gained 7.2% for the week.
The CBOE Gold Index ($GOX : CBOE Gold Index
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Last: 155.83+5.33+3.54%

4:49pm 04/21/2006

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$GOX155.83, +5.33, +3.5%) rose to 155.83, closing up 3.5% for the day and up 6.4% for the week. The Philadelphia Gold and Silver Index (XAU : phlx gold silver index capital-weight
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Last: 155.32+5.16+3.44%

4:03pm 04/21/2006

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XAU155.32, +5.16, +3.4%) closed at 155.32, closing up 3.4% for the session and gaining 6.8% for the week.
Among individual stocks tracked by the benchmarks, shares of Bema Gold (BGO : Bema Gold Corporation
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Last: 5.36+0.32+6.35%

4:01pm 04/21/2006

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BGO5.36, +0.32, +6.3%) tacked on 6.4% to close at $5.36 Friday. Shares of Coeur d'Alene Mines (CDE : Coeur d'Alene Mines Corporation
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Last: 7.06+0.35+5.22%

4:03pm 04/21/2006

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CDE7.06, +0.35, +5.2%) , Randgold Resources (GOLD : randgold res ltd adr
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Last: 23.50+1.19+5.33%

4:00pm 04/21/2006

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GOLD23.50, +1.19, +5.3%) and Harmony Gold Mining (HMY : harmony gold mng ltd sponsored adr
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Last: 16.74+0.91+5.75%

4:03pm 04/21/2006

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HMY16.74, +0.91, +5.7%) each added more than 5%.


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