Gold May Rise for 2nd Week as Interest-Rate Cuts Weaken Dollar

Dec. 15 (Bloomberg) -- Gold may rise for the second straight week on speculation the Federal Reserve will cut its benchmark bank-lending rate, weakening the dollar and boosting the appeal of the precious metal.

Twenty-one of 27 traders, investors and analysts surveyed from Mumbai to Chicago on Dec. 11 and Dec. 12 advised buying gold, which rose 9.1 percent last week to $820.50 an ounce in New York. Three said to sell, and three were neutral.

Last week’s gain was the biggest since Sept. 19. Gold reached a record $1,033.90 in March as Fed rate cuts sent the dollar to an all-time low against the euro in July.

Gold’s gains last week surprised most analysts surveyed on Dec. 4 and Dec. 5. The survey has forecast prices accurately in 142 of 241 weeks, or 59 percent of the time.

Last week’s survey results: Bullish: 21 Bearish: 3 Neutral: 3

Yen Approaches 13-Year High Versus Dollar on Auto Bailout Doubt

Dec. 15 (Bloomberg) -- The yen rose, approaching a 13-year high against the dollar, due to uncertainty over whether U.S. President George W. Bush will use funds set aside for banks to bail out the country’s automakers.

The yen also advanced against the Australian and New Zealand currencies after the U.S. Senate last week rejected legislation to provide General Motors Corp. and Chrysler LLC with $14 billion, deterring investors from buying higher- yielding assets. The yen remained higher after the Bank of Japan’s Tankan index of business sentiment plunged the most in 34 years.

“There’s no meaningful obstacle to further yen appreciation,” said Hideki Amikura, deputy general manager of foreign exchange in Tokyo at Nomura Trust and Banking Co. Ltd., a unit of Japan’s largest brokerage. “Uncertainty about how the U.S. will rescue its automakers supports the yen.”

The yen rose to 90.78 per dollar as of 8:53 a.m. in Tokyo from 91.21 late in New York on Dec. 12, when it advanced to 88.53, the strongest level since August 1995. It was little changed at 121.97 versus the euro from 121.83 last week. The dollar declined to $1.3436 per euro from $1.3369 on Dec. 12, after touching an eight-week low of $1.3454. The yen may rise to 90 per dollar today, Amikura said.

The Bush administration said on Dec. 12 it will consider using money from its $700 billion bank-bailout fund to prevent GM and Chrysler from “collapsing.” A bankruptcy filing by either company would worsen the longest recession since the early 1980s.

The Tankan index that measures confidence among large makers of cars and electronics slid to minus 24 from minus 3, the BOJ said today in Tokyo. A negative number means pessimists outnumber optimists. Economists expected the index to decline to minus 23, according to a Bloomberg News survey.

FCPO Commentary on 15/12/08

FCPO February futures contract plunge RM63 lower compare to previous trading session and close at RM1581 with a total 4517 lots traded in the market. CPO price plunge despite strong overnight closing for crude oil and soybean oil.

Technically, CPO seems failed to breach the resistance levels at RM1680 region on the 3rd attempt and manage to pull back 50% Fibonacci retracement levels at RM1570 region. Based on hourly chart wave count, we expect CPO would challenge the next resistance level at RM1680 and RM1723 region again before starts to retrace back for sideways trading again. Traders were advice to hold long position around the support levels at RM1570 and RM1550 region in the coming trading session.

FKLI Commentary on 15/12/08

FKLI December contract close 9.5 points lower at 849.5 as compare with previous trading session with a total of 5470 lots traded in the market. FKLI plunge during trading session due news released that Auto bailout plan was rejected by the senate has cause regional indices plunge during the trading
session.

Technically, hourly support trend line was challenged during last Friday trading session but manage to hold above the trend line on the 2nd hourly bar chart. However, 846 region was seen as 78.6% Fibonacci retracement
figure from 841 to 862 regions. Technically, FKLI was seen still trading sideways within 846 to 860 ranges while we would expect FKLI to break above the resistance trend line a 860 level and heading towards next resistance levels at 877. Traders were advice to hold long position around the support levels at 840 and 850 regions.