Daily Gold Market Report 14th May 2003

A narrow trading range for gold yesterday and today in Asia as the market continues its consolidation and takes its short-term direction from moves in the dollar. This has meant a minor retreat towards $349/ounce as the dollar regained some poise against the euro. Trade has been reasonably active, with the severance of $350/ounce generating some technically-driven selling in New York, but the fresh emphasis on geo-political risk is helping in part to underpin the market through investment-oriented buying. The general tone in the professional market is constructive, although Asian physical trading was quiet today and gold prices are drifting lower this morning as the dollar consolidates.

Market factors

The tension in Saudi Arabia contributed to some weakening in the Dow yesterday (the index closed 47 points lower), although activity was mixed and there is a view that the market was already due for a correction after its recent strength. European equity markets are positive this morning and the dollar is steady, having regained some of its lost ground in partial response to comments from Bundesbank President Welteke that the ECB could have room for interest rate cuts. In addition John Snow said last night that for the medium term the US adheres to its strong dollar policy.

The markets are awaiting a series of US economic numbers this week, including retail sales at 12:30 GMT (called at +0.3%), with US PPI (called -0.4%), industrial production figures (called -0.4%), and the Philadelphia Fed survey (called -5.2) all due tomorrow and the University of Michigan consumer confidence figure on Friday (expected to be 86.5 after 86.0 in April).