Gold approachs $1,200

Gold approached fresh record highs just short of $1,200 an ounce in trading last week. Continued dollar weakness helped the precious metal reach historic levels with some analysts predicting it could hit $1,300 by the New Year.

Gold back above $1000

LONDON (Reuters) - Gold powered through the $1,000 per ounce psychological barrier on Tuesday, carried by a wave of pent-up technical momentum and dollar weakness, with some analysts eyeing last year's record high at $1,030.80.

Some investors were also seeing the spike in gold as a warning signal to stock market bulls and were fretting about the result of central banks and governments pumping billions of dollars into banking systems to boost growth.

Spot gold rose to $1,007.45 an ounce, its highest since March 2008, when bullion touched the $1,030.80 record. It was trading at $1,001.75 an ounce by 1442 GMT (10:42 a.m. EDT), after briefly dipping below $1,000, and versus $993.85 an ounce late in New York on Monday.

U.S. gold futures for December delivery rose to $1,009.4 an ounce, before easing to $1,006.80 an ounce, versus Friday's close at $996.70 an ounce before the U.S. long weekend.

"Gold's probably the most technically traded financial instrument in the world," analyst David Thurtell at Citigroup in London.

"Where can it go? If it closes through $1,010 and plus tonight, you'd have to think there would be a lot of very nervous shorts around that are getting close to covering, and then it really could pop and go up another $50 quite quickly,"

For a technical story on gold, see and for a snap analysis on gold's price prospects, see

But the sustainability of the precious metal's rally above $1,000 an ounce, which also helped boost palladium and silver to 2009 highs, was in question.

UBS analyst John Reade said in a note to clients that gold options had moved sharply after breaking through $1,000.

"Today's move in implied volatility suggests...that a scramble for upside gold options could lead the spot gold price higher," he said.

"We are unconvinced that all the ingredients are in place for a sustained surge higher in gold," he added.

Implied volatility is a measure of demand for options, which investors use to take advantage of, or protect themselves against, sharp movements in spot rates.

Spot gold has now made three attempts to rise and stay above $1,000, including Tuesday's push. The market stayed above the key level for one day in February this year and three days in record-setting March 2008.

SUSTAINABLE?

Despite gold hitting $1,000, it is far from an inflation-adjusted record, which analysts at GFMS have put as high as $2,079 per ounce.

Some analysts have said the higher gold price reflects uncertainty across markets about how central banks will untangle themselves from fiscal stimulus aimed at reviving economic growth, as well as dollar weakness.

"Gold is celebrating because the day when inflation might return is getting sooner rather than later," Ashok Shah, chief investment officer at London and Capital.

"As long as the authorities are intent on not reversing their policies then gold will remain in demand and it will be wanted."

Investment action took a break, with holdings in the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, standing at 1,077.63 tonnes as of September 7, unchanged from Friday, denting the price prospects for gold.

"We are still skeptical that this is a sustainable rally," said Andrey Kryuchenkov, an analyst at VTB Capital.

"There is very little reason to be long gold, with already record spec long positions accumulated in the market."

In other metals, silver hit a 13-month high of $16.81 an ounce and was at $16.69 an ounce versus $16.29 an ounce. Palladium touched $296.50 an ounce, its highest since September last year. It was last at $294.00 an ounce versus Monday's $291.50.

Platinum was at $1,283.50 an ounce versus $1,255.00 an ounce on Monday.

Sterling rises to highest levels in 2 weeks

LONDON, Sept 8 (Reuters) - Sterling rose more than 1.0 percent against the dollar to its highest in two weeks on Tuesday, spurred by the dollar's broad fall and helped by a higher-than-expected increase in UK industrial production.

UK manufacturing output rose 0.9 percent in July, its fastest rate in 1-1/2 years, on a sharp pick-up in car production. [ID:nONS004469]

The gain was much higher than forecasts for a 0.3 percent increase. The wider measure of industrial output, which includes energy production, rose by 0.5 percent on the month.

Analysts said the figures suggested Britain's economy may be on track to emerge from recession.

"Today's data reinforce our view that the UK economy is on course for positive growth in Q3," said Colin Ellis, economist at Daiwa Securities, noting even if production is unchanged in August and September, manufacturing output would be on course to grow some 1.0 percent in the third quarter.

The data bolstered the pound, which was already rising on a sharp drop in the dollar against a number of currencies.

BOE to maintain interest rates

LONDON, Sept 8 (Reuters) - The Bank of England looks

certain to keep interest rates at a record low 0.5 percent next

week and hold its quantitative easing programme at 175 billion

pounds after last month's shock 50 billion pound expansion.

Although recent surveys suggest conditions are stabilising,

lending remains weak and rising unemployment and future

government spending cuts mean growth is likely to be subdued for

some time -- lessening the urgency for policymakers to start

unwinding their stimulus measures.

The BoE will make its announcement at 1100 GMT on Thursday

following the conclusion of its two-day Monetary Policy

Committee meeting.

GBP/USD Sunshine or Gloomy days ahead

What's up with GBP/USD? is it the end of the pound's recent rally? Will the pair now test new historical lows? Questions, quesitons.....

Unfortunatly much like my car my crystal ball is in need of a service and to make matters worse I have had 660mls of Chang. It's Sunday, the sabbath and there really isnt much point in trading the markets today so I have been easily dragged away from my PC by my 18 month son when he requests for ''swim, swim''. The sun was shining very brightly today and the intense mid summer mid-day Thai sunshine required me to put a umbrella over the pool so we could cool down but still enjoy some shade.

There are some typos which you will have to endue because this is just a little hello from the LOS to say go out be with your family and enjoy life..because tomorrow bright and early the markets will be back to life.

x

PR: wait... I: wait... L: wait... LD: wait... I: wait... wait... Rank: wait... Traffic: wait... Price: wait... C: wait...

Forex News

EurUsd Consolidation is the name of the game for a day or two in anticiption of Friday's Non-Farm Payroll numbers. EUR USD has found resistance at the trend channel at 1.4430 / 45 and somehow picked up support from a one off high back in December 08 at 1.4379. The prior breakout level at 1.4338 still remains as the major support level and 1.4291 just below there but for intraday players there is a nice range between 1.4379 and 1.4430 / 45 that should provide some easy pickings for 50 pips or so until the ADP number this afternoon.

GbpUsd Looking again at the longer term picture it is easy to see why 1.7029 is such a big hurdle to clear and at the same time why it was so easy to get there after clearing 1.6663. There is huge RSI divergence on the daily chart suggesting that the move was completely stop related and the pair looks like it is unlikely to catch a strong bid until it retests the break out level back down at 1.6663. The sweet spot for the medium term bulls is all the way back down at 1.6272 and for the shorts 1.7029 is looking attractive with the short sweet spot at 1.7309 which, as mentioned before, is a 50% retracement of the entire 2 year down move and the last of the 2 year downtrend channels. Intraday traders expected to play yesterdays range between 1.6890 and 1.7005.

UsdJpy The pair is getting a little congested now between the 4 week uptrend and the 2 year downtrend channel. The long entry level highlighted yesterday at 94.44 was followed by a swift move to 95.42, just slightly above the resistance at 95.29 but still not making a new high against the earlier move in the Far East overnight (95.46). Long buying now anticipated at 94.78 but upside remains capped until we break that high from yesterday so expect intraday trading between the two levels, 94.78 and 95.30 / 45.

UsdChf Typical of USD CHF, range bound action is back in play with intraday buyers of the pair (and potentially the SNB) at 1.0578 and the prior breakdown level at 1.0632 still providing good supply, building a short term resistance level. Only a move back above 1.0654 could give the USD bulls any hope of getting back into the old ranges. To the downside a move below yesterdays low at 1.0563 and the 2008 closing low at 1.0556 could be very costly for the SNB and those riding their coat tails but the support is extremely significant. If it does go then the next major level is 1.0325. Intraday, expect 50 or 60 pips rangebound action between 1.0573 and 1.0632

Forex News provided by AC Markets

Forcasted Central Bank Rate Decision

Date / GMT				ACM		Consensus		Current Rate
6th/11:00		European Central Bank Rate Decision		1.00%		1.00%		1.00%
		A wide majority of the market expects the ECB to remain at the current level of 1.00%, but a growing consensus is beginning to suspect the central bank may forced to cut rates 25bps. Commentary released by IMF highlight critical economic challenges for the Eurozone region. In the executive summary of IMF publication released last week, they make a cautionary statement: “while the Eurozone facing strong disinflationary pressures, monetary policy will need to remain supportive…the benefits of further cuts in the policy rate need to be weighed against their possible adverse impact on the functioning of money markets but any potential margin for further reductions out to be utilized as soon as possible.” ECB President Trichet has been reluctant to establish a hard floor of 1.00% as of recent, which is probably due to the appreciation in the Euro hindering export driven growth. The sharp decline of GDP to -2.5 reflects the severity of economic conditions in the Eurozone. In addition to the growth compenent, the interest rate market remains far too delicate to absorb any rate hikes in the near-term as yields begin to pose some degree of relative value for investors looking to migrate out of risk-averse positions.
6th/11:00		Bank of England Rate Decision		0.50%		0.50%		0.50%
		The BoE is expected to hold rates steady at 0.50% which is line with market forecasts. It is most likely the central bank will adopt a "wait and see" approach following the aggressive measures taken in the form of asset purchases over the last several months. A key indicator suggesting that any additional quantitative easing would occur on a much more conservative scale is the 150bln Sterling quota for gilt purchases which has not been met. Fulfilling the quota for gilt purchases will probably happen before any additional monetary policy action will be announced and this is supportive of the Gbp. The UK economy remains under pressure with rising unemployment at 7.6% vs. 7.4% estimated. Other leading indicators such as a negative GDP of -0.8% and industrial production at -11.9% pose significant challenges for UK policymakers and the deployment of further quantitative easing may prove detrimental to the long-term outlook in region. Source: Ac Markets

Pound rises to monthly high of 1.6550

GBPEUR/GBPUSD

The Pound rose to the highest level in a month against the Dollar, rising to a high of $1.6550 last night, while the UK currency also advanced versus the Euro and Japanese Yen, as stocks rallied and survey showed that demand in the housing sector had picked up. The benchmark FTSE 100 Index rallied for a sixth consecutive day, the longest streak of gains since January, as higher commodity prices triggered a rally in raw-material producers.

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