Broker's Notes: Oil falls for second day; gold trades firm

Oil

Oil fell for a second day on speculation fuel demand will decline as the U.S. summer peak consumption season ends and amid doubts about the pace of the global economic expansion. Data from the US Commodity Futures Trading Commission reveal that hedge fund managers and other large speculators decreased their net-long position in New York crude-oil futures in the week ended Aug 31. Speculative long positions, or bets prices will raise, outnumbered short positions by 13,120 contracts on the New York Mercantile Exchange. Net-long positions fell by 14,203 contracts, or 52 percent, from a week earlier.

Sterling

Sterling fell to a 6-week low versus the euro on Monday, hit by reports of heavy selling by a UK clearing bank and concerns over Britain's fragile economic recovery. There was speculation that the order was related to the UK's contribution to the European Union's agricultural budget. Sterling had initially rallied to $1.5490 as riskier assets were boosted in the wake of a U.S. employment report on Friday that was less dire than expected. Technical analysis suggests that the next key support was at $1.5322, the 38.2 percent retracement of the May to August rally. A string of soft data releases last week reignited concerns over the fragility of Britain's economic recovery, prompting expectations of pressure on sterling against most of its major crosses.

Holiday in US and Canada

Today is a holiday in the U.S. and Canada. The currency market will still be open for trading but the equity and bond markets will be closed for Labour Day. With no major economic data scheduled for release from any country, it should be a relatively quiet trading session. The only piece of US data worth watching this week is the trade balance from US. Rest of the week is likely to be pretty dull on the economic data front.

Gold

Gold traded firm on Monday as stock markets firmed on optimism the US economy would not fall back into recession, while a slight drop in ETF holdings put additional pressure. Bullion was likely to trade in a tight $10 range, with U.S. investors away for the Labor Day holiday, while silver backtracked after rallying to its strongest since March 2008 on Friday as investors booked profits and ETF holdings dropped. The world's largest gold-backed exchange-traded fund, SPDR Gold Trust said its holdings slipped to 1,294.442 tonnes by Sept 3 from 1,294.908 tonnes on Sept 2. The holdings surged to a record 1,320.436 tonnes on June 29. The world's largest silver-backed exchange-traded fund, the iShares Silver Trust said its holdings dropped to 9,276.73 tonnes by Sept. 3 from 9,280.40 tonnes on Sept. 1. 

Source: Richcomm Global, Dubai

Price Update

GOLD

1249.55

SILVER

19.88

EURO

1.2881

GBP

1.5368

YEN

84.21

RUPEE

46.52

AED / INR

12.666

AUD

0.9171

CHF

1.0146

CAD

1.0345

OIL - WTI-Aug'10)

74.16

Date

September 6, 2010

Time

4:44:29 PM