Will Volatility Return To Gold?

February 26, 2003
Vincent Mao

Worries over a war
with Iraq and North Korea’s war threats
continued to weigh heavily on stocks and the dollar. Meanwhile bonds and gold
continue to benefit from safe-haven buying. And energies are higher on report of
declining supplies.Â

Stock index futures could not continue with
yesterday’s turnaround. Continuing worries over Iraq, threats form North Korea,
and disappointing sales from Hewlett Packard dragged down stocks. Hans Blix is
reporting more cooperation from Iraq. He also will present another report to the
UN Security Council on Friday, March 7.Â North Korea accused the US of playing
war games and advised its people to be ready for war. Disappointing revenues
from Hewlett-Packard also weighed heavily on stocks.

Although the dollar has stabilized in recent
weeks, the threat of war with Iraq continues to weigh on the greenback. The
March dollar index
(
DXH3 |
Quote |
Chart |
News |
PowerRating) fell 0.22 to 99.69, and is closing in on support
at 99.50.

Treasury futures continue to benefit from
safe-haven buying as a war with Iraq would disrupt economic growth. The March
30-year contract gained 22/32 to 114 24/32 and busted out to a new contract high
while the March 10-year contract gained 9/32 to 116 6/32.Â A close below 115
26/32 on the 10-year and 113 29/32 on the 30-year would be bearish.

April gold
(
GCJ3 |
Quote |
Chart |
News |
PowerRating) gained 1.60 to 354.10.
Activity in gold has been quiet after gold plummeted nearly $40 from its high
earlier this month.

Vincent Mao

Will Volatility Return To Gold?

BUY THE FEAR, SELL THE GREED

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