Profit taking sends precious metals prices tumbling

New York (Platts)--3Aug2006

Precious metals prices have been declining since the opening in New
York, in what some traders described as continued volatility in these
markets--up one day, down the other without any logical explanation.

At 10:37 am, the nearby December gold futures contract was trading at
$657.50/oz, a decline of $6.60 from Wednesday's settlement and the September
silver contract was trading at $12.20/oz, down 2.5 cents.

One trader suggested that precious metals might be taking a cue from the
energy markets Wednesday morning. Other barometers of the gold market do not
offer a clue. War is still raging in Lebanon with the Israeli army
chasing after Hezbollah fighters and there has been no cooling down at other
hot spots in the region.

In the currency markets, the dollar has not declined further than the
levels it held yesterday. The greenback is currently trading at yen 114.85 and
$1.2817/euro--largely unchanged from yesterday's levels.

"I can't explain why gold is down $6 today, and I cannot explain why it
was up $6 yesterday either," said a second trader. Thus the likely reason is
profit taking by short-term speculators.

The PGMs have been following gold and silver on the downward path, with
the nearby October platinum contract plunging $10.70 to $1,249.90/oz and
"September palladium falling $4.45 to $324.50/oz.

--Ovid Abrams; ovid_abrams@platts.com

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