Singapore (Platts)--20Jun2007

The spot gold price failed to hold onto Wednesday's rebound above $660/oz
and slipped in the morning trading session in Hong Kong on Thursday. Gold
opened at $654.10-654.60/oz in Hong Kong on Thursday, down from $660-660.50/oz
at the close of the afternoon trading session on Wednesday.
     Local traders said spot gold inherited the lower level from the New York
trading session on Wednesday. 
     "Gold fell below $660/oz on liquidation amid a lackluster market during
New York trade," one trader said. He noted that the US dollar remained
steady while the oil price slipped, giving downward pressure to gold. "Many US
fund managers have also pulled their funds out of the commodities market and
redirected them into the stocks market," he added.  
     Another trader said the US dollar rose against the yen in early trade on
Wednesday as carry trade turned active after the Bank of England said only 5
members voted to leave interest rates unchanged at the June monetary policy
meeting. In New York, the US dollar opened higher at Yen 123.50 from Yen
123.34 at Tuesday's close while the euro rose to $1.3428 from $1.3423. The US
dollar then remained little changed against the yen and the euro, but the
sterling rose sharply on expectations of higher interest rates. At the close,
the US dollar stood at Yen 123.54 and $1.3415 per euro, while the sterling
closed at $1.9946. 
     He added that August gold closed $4.70 lower at $660/oz on a fall in oil
prices during New York trade. July crude oil closed 91 cents lower at
$68.19/bbl on a rise in inventory.
     "After the initial round of limited short-covering, the Asia morning has
resumed its usual slow moving pace with players staying sidelined and waiting
for London to come in," the first trader said. He expects gold to be
rangebound in the afternoon.
     The second trader said spot gold may test support at $649/oz where a
breach would shift focus to $644/oz and selling can be considered on upticks
towards $658/oz with stops at $662/oz. 
     Some key economic indicators due later Thursday include April Canada
retail sales, June US Philadelphia Fed business index, May US leading
indicator and US jobless claims for week ended June 18.
     Meanwhile, gold futures trading on the Tokyo Commodity Exchange dropped
Yen 16-17 (13-14 cents)/g for June 2007-April 2008 contracts at the end of the
Thursday morning session, tracking the spot gold's fall below $660/oz. These
contracts were settled between Yen 2,601-2,627/g. Turnover totaled 31,692
contracts Thursday, up 28,818 contracts Wednesday, indicating a comparatively
more active morning trading session. The most active April 2008 contract lost
Yen 17 to settle at Yen 2,627/g at the end of the Thursday morning session
with a turnover of 27,327 contracts.