Gold under pressure as oil price continues to decline

London (Platts)--3Oct2006

Gold has failed to sustain its brief move back above the $600/oz level,
undermined by slumping oil prices, with spot gold testing support around the
$592/oz level in morning London trade Tuesday.
Spot bullion was indicated at $592.25-593.00/oz at 0900 GMT, down from
Monday's afternoon fix in London at $600.60/oz.
"Gold's move below the 200-day moving average does not bode well for the
metal, suggesting it is vulnerable to further tests on the $590-595/oz support
area," Standard Bank London said in its daily web site report.
Gold's fortunes continue to be linked closely to moves in the energy
markets, where benchmark New York sweet crude oil futures were below
$61/barrel and headed lower in Asian afternoon trade Tuesday, not far from
levels reached at the end of Monday's spectacular collapse.
The New York Mercantile Exchange's November light sweet crude futures
traded at $60.54 at 0817 GMT, down 49 cents from Monday's close. The November
contract spiraled down $1.88/barrel in thin trading Monday, the Yom Kippur
holiday, as small sell-stops were triggered at $62, $61.80 and $61.50/barrel.
Across the Atlantic, IPE Brent crude for November delivery slid below the
psychologically important $60/barrel mark to change hands at $59.78 at 0819
GMT on the Intercontinental Exchange, down 67 cents. The contract had caved in
by $2.03/barrel in Monday's session.
The market has dismissed news of a combined 170,000 b/d of output cuts by
Nigeria and Venezuela, especially in the absence of a collective, formal
effort by OPEC to cut supplies. OPEC heavyweight and world's largest exporter
Saudi Arabia has yet to weigh in on the issue of curtailing supply.
The euro was bid at $1.2737 at 0900 GMT, unchanged from Monday's closing
level.

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