US GOLD OPEN - Comex gold takes breather in Jackson Hole run-up

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Tom Jennemanntom.jennemann@fastmarkets.comSenior North American Correspondent973-204-3383

New York 28/08/2012 - Gold futures ticked modestly lower Tuesday as traders book profits and rationalise positions ahead of Fed Chairman Ben Bernanke's speech later this week and the three-day Labor Day holiday in the US.

Gold for December delivery on the Comex division of the New York Mercantile Exchange was last down $7.90 at 1,666.70 an ounce. Trade has ranged from $1659.10 to $1,669.00 in typically light volumes.

“The markets are preparing themselves for the Jackson Hole meeting, with positions being cut back to bare minimums with and with the illiquidity of the pre-Labor Day and end of summer circumstances tending to exaggerate market movements,” Dennis Gartman, editor of the Gartman Letter, said.

At Jackson Hole, Wyoming, Bernanke could could give fresh hints on if and when a third round of quantitative easing (QE3) might be implemented.

“Our US Strategists expect the risk around Bernanke’s speech is a 2010 redux where he simply outlines the costs and benefits of the available options and remains mum on timing,” RBC Capital Markets said in a note.

In the wider-markets, the dollar was last about a quarter cent softer at 1.2543 against the euro, while Germany's DAX and France's CAC-40 were off 0.75 percent and 0.90 percent respectively. US equity markets are expected to open mixed to slightly lower.

The energy markets are bucking the trend of generally lower commodity prices as offshore oil rigs are evacuated and US Gulf Coast refineries are shut-down in anticipation of Tropical Storm Isaac reaching hurricane strength. Light sweet crude (WTI) oil futures for October delivery on the Comex division of the Nymex were last up 68 cents at $96.15 per barrel.

In data, the S&P/Case-Shiller home price index and The Conference Board’s measure of US consumer confidence will be released today.

“Consensus [for consumer confidence] is for the reading to hold relatively steady at 66.0 (compared to the previous month’s 65.9). But we have already seen the preliminary Michigan survey improve and, with stock strength possibly being of significance, it could be that the Conference Board data will be above consensus,” Standard Bank said.

“This could spark some weakness in precious metals. However, this might be short-lived if tomorrow’s data flow (GDP, home sales, the Fed’s Beige Book) hints at a different story,” Standard Bank added.

As for the other precious metals, Comex silver for September delivery was last down 21.3 cents at $30.835 an ounce. Trade has ranged from $30.485 to $30.975.

“Silver prices this morning remain roughly $4.00 an ounce above the early August lows and that suggests silver could be technically vulnerable to some back and fill action,” the CME Group said in a market commentary.

“However, silver and other physical commodity markets continue to draft some support off hopes for more hints of economic assistance at the end of the week from the Jackson Hole Fed meeting,” it added.

Platinum futures for October delivery on the Nymex were down a sizeable $29.4, or 1.9 percent, at $1523.80 an ounce and the most-actively traded palladium contract was at $639.40 an ounce, off $15.35.

“The platinum market came under substantial pressure during overnight trading, which some traders find surprising considering the ongoing labour issues in South Africa,” CME said.

“Seeing South African governmental officials getting involved and looking to implement a peace accord may have encouraged additional long liquidation during the overnight session,” it added.
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