DGCX- on the move:

6th November, 2006

¾ Gold and silver –register significant gains of 4.86% and 3.26% respectively.

¾ US Dollar advances against Japanese Yen and Euro by 0.61% and 0.23% respectively. The precious metals market continued its rally for the fourth straight week. Gold prices posted a significant gain of 4.86% while silver followed suit rising 3.26% over the week. The currency market witnessed the Japanese Yen and Euro decline marginally by 0.61% and 0.23% respectively against US Dollar. The Sterling pound however moved marginally higher by 0.15% against the greenback. At DGCX a total of 15,955 contracts valued at $475.66 million were traded during the week. DGCX December delivery gold futures contract began the week on a positive note at $606.90/troy oz – $6.20 higher than its previous week’s close. It initially plunged to an intra-week low of $600.80/troy oz, but bounced back later in the week following persistent buying. The contract climbed a high of $631/troy oz but finally settled for the week little lower at $629.90/troy oz. DGCX February delivery gold contract started the week at $609.50/troy oz and after sliding to a low of $607.00/troy oz, scaled a peak of $636.30/troy oz. The contract concluded the week a tad lower at $635.40/troy oz. DGCX December maturity silver contract opened the week at $12.230/troy oz. Initially the contract braced a weekly low of $12.135/troy oz but recovered later in the week. It rallied to an intra-week high of $12.650/troy oz and finally settled at $12.495/troy oz – securing a gain of 39.5 cents per troy oz. In the DGCX currency market segment, Euro contract dated December started trading for the week at $1.2755/Euro. After falling to a weekly low of $1.2720/Euro, it scaled an intra-week high of $1.2820/Euro. Prices for the contract finally settled for the week at $1.2734/Euro. The Yen contract for December maturity declined by 52 ticks and closed the week at $0.8513/100 Yen which incidentally was lowest price for the week. The December maturity GBP contract posted a gain of 0.29 cents during the week. It began the week at $1.8981/GBP, clocked a weekly high of $1.9114/GBP before ending the week lower at $1.9009/GBP.

635

635

DGCX December 2006 Gold Futures Contract

630 625 620 615

Close 629.90

610 605 600

610 605 600

30 Oct - 3 Nov

595 590

595 590

16 - 20 Oct 24 - 27 Oct

585 580 575 570 565

630 625 620 615

585 580 575 570 565

09 - 13 Oct

Volume

3000

3000

Open Interest

2500

2500

2000

2000

1500

1500 2 2006

9

16

24

6 November

Close 12.495 12.5

12.0

30

129.0

12.5 DGCX December 2006 Silver Futures Contract

12.0

DGCX Continuous 2006 Euro Futures Contract

129.0

128.5

128.5

128.0

128.0

127.5

127.5 Close 127.34

127.0

11.5

11.0

126.5

126.5

126.0

126.0

125.5

125.5

11.0

15 25 2006

2 9 October

16

24 30 6 Nove

21 2006

87.0 191.5 191.0

127.0

11.5

DGCX Continuous GBP Futures Contract

191.5 191.0

190.5

190.5

190.0 189.5

190.0 189.5

Close 190.09

189.0

189.0

188.5

188.5

188.0

188.0

187.5

187.5

187.0

187.0

186.5

186.5

186.0

186.0

185.5

185.5 15 25 2006

2 9 October

16

24 30 6 Nove

2 9 October

16

24

30

6 Novem

87.0

DGCX Continuous JPY Futures Contract

86.5

86.5

86.0

86.0

85.5

85.5

85.0

Close 85.13

84.5

85.0

84.5

15 25 2006

2 9 October

16

24 30 6 Nove

Economic Alerts: Markets await a clearer picture on the state of the US economy to more accurately gauge the timing and direction of any Fed rate moves. Although comments from FOMC officials have maintained a more hawkish tone in recent days, some have placed more emphasis on the slowing economy over inflation. • US government report said unemployment declined to a five-year low in October and hourly earnings increased. The jobs report suggested the U.S. economy is not slowing as quickly as had been speculated. The unemployment rate decreased to 4.4% in October. The US economy added 92,000 jobs last month after gaining a revised 148,000 a month earlier. • UK September mortgage approvals hit their highest in over two-and-a-half years, while mortgage lending growth stayed steady. The figures suggest that the UK housing market remains surprisingly buoyant, further suggesting that the Bank of England will raise interest rates by a further quarter point this month. The number of approvals for house purchases jumped to 126,000 from 120,000 in August, the highest since Feb 2004.

World Markets in motion: Market US S&P 500 Spot Gold - ($/ounce) DGCX Dec Gold futures – ($/ounce) Spot Silver - ($/ounce) DGCX Dec Silver Futures - ($/ounce) DGCX December Euro Futures - ($/Euro) DGCX December GBP Futures - ($/GBP) DGCX December JPY Futures - ($/100 Yen) NYMEX Nov Crude oil ($/barrel)

Previous Week close 1377.34 600.00 600.70 12.050 12.100 1.2763 1.8980 0.8565 60.75

Current Week close 1364.29 627.85 629.90 12.590 12.495 1.2734 1.9009 0.8513 59.14

% Change -0.95% 4.64% 4.86% 4.48% 3.26% -0.23% 0.15% -0.61% -2.65%

Market Mood: Precious metals market continued with their rally in the fourth consecutive week. Analysis and comments from some of the experts in the field are as under: • In what has emerged as not particularly good news for gold bulls, a report commissioned by Fortis Bank has suggested gold supply will outstrip demand in 2007. The report predicts the market surplus (at current prices) to rise significantly in 2007 to 219 tonnes, despite its forecast that supply will fall by 159 tonnes and

demand will fall by a huge 313 tonnes. The report calculates supply will fall by 159 tonnes in 2007, but that demand will fall by 303 tonnes. Mine output is forecast to be up (+21t) while official bank sales will be down (-51t), hedging lower (-12t) and recycling also lower (-117t). Jewellery demand is expected to increase (+47t) as is electronic demand (+31t), but this will be overwhelmed by weaker ETF demand (108t), zero central bank purchases (-100t) and reduced de-hedging (-186t). "Other uses" (coins etc) will rise 3t. The analysts of the report have forecasted a year-end gold price of US$580/oz, and then US$550/oz in 2007. This is in stark contrast to other gold analysts such as GFMS. According to Paul Walker, CEO of London-based research company GFMS Ltd, gold prices may rise by $100 an ounce by the end of this year and breach the $700 level on renewed interest from investors. The precious metal could trade between $580 and $720 an ounce in the next six months as investors seek to diversify from stocks and bonds and may even rise in 2007 to the 1980 high of $850 an ounce, Walker said. • The “commodities super cycle” that has boosted market prices to record and nearrecord highs isn’t over, suggests analyst Wiktor Bielski at the Morgan Stanley private bank, who believes prices may rise again next year because of production shortages, falling inventories, the risk of strikes and renewed investment from fund managers. Bielski suggests that global commodity supplies may test record lows in 2007 as development of these supplies to meet sustained demand growth is lagging by 3-5 years. He feels the world may not yet have seen the highs for commodity prices and, therefore, the commodities supercycle is just pausing for breath. The next leg upward in the commodities cycle will happen in the next six to 12 months. Pension and mutual funds have invested $120-150 billion in commodities, Morgan Stanley says, but admits there have been sell-offs for cash in recent months as the global market has softened. Bielski admits that the index has faltered but suggests that “fears of a world economic collapse in 2007 are overdone.” He suggests that consumers in Europe, Japan and other Asian countries will replace the slowdown in US consumer spending. • In its currency forecast report, Danske Bank finds the USD to be neutral to slightly undervalued against the EUR and the JPY to be heavily undervalued against the EUR. The bank expects both crosses to approach (but not reach) their respective equilibrium levels in 2007. In other words, the EUR is expected to fall marginally against the USD and slightly further against the JPY. The risk is that 2007 will bring

only marginal movements in the EUR/USD and a continued weak JPY. The analysts no longer think it’s likely that the USD will depreciate sharply thereby lowering their forecast for the EUR/USD over the coming months. The expected drivers at the beginning of 2007 are resurgence in the US economy, prompting further interest rate hikes by the Federal Reserve, and a slight slowdown in Euroland. While global industrial activity and the US housing market are still on the wane, both can be expected to stabilize towards the end of this year. Although Europe also stands to benefit from this, one needs to remember the German VAT increase at the beginning of next year, which is expected to lead to a growth pause. This will open the door to a change in central bank policy, which will also be reflected in the FX market. In Japan the report predicts continued growth and a slight rise in inflation. The BoJ is therefore expected to continue its gradual normalization of monetary policy. Whether this in itself is enough to push up the JPY is still uncertain, but there is a growing feeling that the JPY has strayed too far from equilibrium. A more permanent increase in the value of the JPY will probably require a shift in global liquidity in line with that seen in spring 2006. This could potentially happen in or around Q2, which could bring simultaneous interest rate hikes from the Federal Reserve, ECB and BoJ.

Technical View: Precious metals prices surged upwards to register sizable gains for the week. Gold prices finished at their highest weekly closing levels after August 11, 2006. The quantum of gain per week has been the highest after the week ending July 14, 2006. DGCX December delivery gold recorded a solid gain of 4.86% or $29.20/troy oz. Silver prices under performed that of gold during the week. DGCX December maturity contract closed higher for the week by 3.26% or 39.5 cents per troy ounce. After four consecutive weeks of rise, the medium to long term technical position undoubtedly has turned in favour of the bulls. The short-term trend is also technically up but the indicators have stepped into overbought territory pointing to a possibility of a correction in the near term. Let us take a look at some of the important technical factors seen on charts from a short as well as medium to long term perspective. The weekly price charts of gold have turned distinctly bullish. A long white candle accompanied with good volumes has crossed decisively above the downtrend line from the May 2006 peak indicating a trend reversal. The prices have risen above the medium to long term moving averages which in turn have started rising. The reading

on the weekly oscillator charts have improved significantly. The MACD indicator is rising but is yet to generate a buy signal. The weekly stochastic oscillator continues to remain in a buy mode and the 10-RSI is also rising. The overall medium term picture indicates that the intermediate trend has turned up and the yellow metal could see a sustained rise in the weeks / months ahead. On the daily charts, the short-term trend continues to remain upwards. Prices have broken above the medium to long term down trend line as well as the bullish inverse “head and shoulder pattern” which was mentioned in the last week. The initial price target of $635-40 looks pretty reachable now. Short-term moving averages such as the 13-day and the 34-day EMA are moving up behind the price in confirmation of the uptrend. Most of the oscillators have hit a new high level of last 3-4 months; this augurs well for the bulls as it shows that the current rise is backed by strong momentum. At times this factor also gives an advance indication that a new uptrend is underway. The only point of weakness that can be observed on the daily charts is that most of the momentum indicators have either entered the overbought region or close thereto. The chances of a minor corrective fall or sideways movement in the next few sessions is a strong possibility. Analysts opine that the corrective falls can be used as buying opportunities with appropriate protective stops. Further rise in prices in course of the current uptrend is likely to find resistances at $641-42 levels, followed by $648-50 area and thereafter at $660-62 area. In case of a corrective fall or reversal, supports are likely at $620-21 levels; $610-12 levels followed by $596-98 levels.

Xchange Communication: The next 2-day training session for DGCX members & representatives will be held on 8th and 9th November 2006. Members interested to participate may call the Training Department at +9714 3611616 or e-mail at [email protected]

Disclaimer: Xchange Newswire is intended for the purposes of education and information only and should not be construed under any circumstances either by implication or otherwise, as trading advice or any form of solicitation for purchase or sale of any commodity, derivative product or other investment product - whether or not traded on Dubai Gold & Commodities Exchange (DGCX). This document has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. While reasonable care has been taken during compilation of this document, DGCX holds no responsibility for any error or discrepancy in the information contained herein. The reader must take appropriate judgment without any prejudice or compulsion.