New York gold futures fell on Wednesday and for the first time this week as the U.S. dollar rallied against other world currencies. Commodities as group moved opposite of the greenback, as silver declined 2.5 percent, platinum fell 0.2 percent and crude oil retreated 0.2 percent.
US stocks ended mixed after a two-day rally. The tech-laden Nasdaq rose slightly while the Dow and S&P declined 0.26 percent and 0.55 percent, respectively.
New York precious metal figures follow:
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Gold for April delivery finished down $6.00, or 0.5 percent, to $1,112.00 an ounce. It ranged from $1,107.50 to $1,126.40.
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Silver for March fell 42.6 cents to close at $16.317 an ounce. It ranged from $16.280 to $16.950.
- April platinum lost $2.60 to end at $1,576.20 an ounce. It ranged from $1,567.20 to $1,594.00.
In PM London bullion, the benchmark gold price was fixed earlier in the North American day to $1,115.25 an ounce, which was an increase of $4.25 from Tuesday. Silver rose a penny to $16.790 an ounce. Platinum was settled at $1,578.00 an ounce for a gain of $23.00.
Notable bullion quotes follow:
"Gold is trying to look ahead," Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said on Bloomberg. "If the government has to put together another round of stimulus, then that will set us up for an inflationary cycle with no growth. It plays to gold and all commodities."
"Gold has really struggled in recent months between $1,125 and $1,150 an ounce. You certainly need a much stronger euro — the $1.41 or $1.42 levels would be more compelling to see gold rally,” Bruce Dunn, vice president of trading at New Jersey-based Auramet, said on Reuters.
"Although a convincing breach to above the $1,125 area would conceivably obviate a downtrend line in the metal, there is still repair work for gold to do at this time, not the least important aspect of which ought to be a return of interest (and actual accumulation) by the gold-backed ETFs," wrote Jon Nadler, senior analyst at Kitco Metals, Inc. "Said vehicles continued to shed small amounts in balances even as the yellow metal underwent its $40+ bounce over the past three sessions."[Read Nadler’s full commentary.]
Gold, considered a hedge during times of high inflation and economic uncertainty, tends to follow oil and move opposite to the U.S. dollar. A rising greenback makes dollar-denominated commodities, like bullion, more expensive for holders of other world currencies.
Oil and gasoline prices
Oil futures fell "after a volatile session on Wednesday after the Energy Information Administration reported an unexpected rise in U.S. crude inventories, evidence that weak demand persists," wrote Nick Godt and Polya Lesova of MarketWatch. The EIA reported that oil inventories climbed by 2.32 million barrels to 329 million last week.
"The general price trend will remain lower until we see demand start to pick up," Sean Brodrick, a natural resource analyst with Weiss Research in Jupiter, Florida, said on Bloomberg.
New York crude-oil for March delivery declined 25 cents to close at $776.98 a barrel.
The national average for regular unleaded gasoline fell eight-tenths of a cent to $2.661 a gallon, according to AAA fuel data. The current average is 3.9 cents lower than last week, a penny more than a month back, and 878.1 cents above the price of a year ago.
U.S. Stocks
U.S. stocks were mixed on Wednesday, "falling after a two-session rally, amid weakness in banks, concerns about Toyota and questions about the outlook for the labor market," wrote Alexandra Twin of CNNMoney.
"Only about 30% of companies are reporting revenue increases, which bothers us," David Prokupek, managing partner at Consumer Capital Partners, a Denver portfolio-management firm, said on MarketWatch. "That’s part of the reason we’re in no man’s land for the market right now."
The Dow Jones industrial average declined 26.30 points to 10,270.55. The S&P 500 Index retreated 6.04 points to 1,097.28. The Nasdaq Composite Index rose 0.85 points, or 0.04 percent, to 2,190.91.
Gold, Silver, and Metals: Prices and Commentary – Feb. 3
by Jon Nadler, Kitco Metals Inc.
Good Morning,
Overnight gains continued in gold, courtesy of manifest risk appetite and additional consolidation in the US dollar. Highs near $1125 were seen, albeit the advance softened by the time the NY session got underway this morning. Spec funds are back in the market, emboldened by the successful breach of the $1117 mark yesterday, and are trying once again to wrest the metal away from the bears who almost got going in earnest near the $1070 area.
Although the greenback gave up some additional ground on the trade-weighted index (last seen at just under the 79 level), it did not -as yet- allow for a recapture of the 1.40 level by the euro. The common currency continues to be plagued by worries about Greece, albeit today’s advance took place because the European Commission approved that country’s austerity plan. The IMF still has to express its support for said deficit-slashing plan.
Although a convincing breach to above the $1,125 area would conceivably obviate a downtrend line in the metal, there is still repair work for gold to do at this time, not the least important aspect of which ought to be a return of interest (and actual accumulation) by the gold-backed ETFs. Said vehicles continued to shed small amounts in balances even as the yellow metal underwent its $40+ bounce over the past three sessions.
Indian gold demand abated once again as locals continued to mention ‘sizeable’ orders clustered at levels beneath the $1100 mark, but had little positive to say about present offtake levels. The market’s focus now shifts to the ADP payroll figures, ahead of the US government’s own official report due on Friday. The numbers revealed that the US shed only 22.000 jobs last month, making it the smallest such loss in two years. The statistic helped engender a small recovery in the US dollar.
The midweek New York trading session started off with significantly pared (as compared to the overnight action) gains in gold, which was quoted at $1114.00 per ounce, showing only a $0.60 advance per ounce as against a bit of a rebound in the US currency. Silver headed lower on the open, shedding 3 cents to $16.67 an ounce. Meanwhile, platinum fell $4 to $1575 and palladium held ground unchanged, to start the day at $442 the ounce. Following the ADP data, gold slipped closer to the $1110.00 per ounce mark and silver declined a more sizeable 18 cents.
Rhodium was steady at $2380 after having risen $70 on Tuesday. Carmaker Toyota continues its repair campaign affecting over 2 million vehicles, while rival Ford managed to cut into its sales turf during this period of technical troubles. Meanwhile, Saab –rescued by tiny auto firm Spkyer- is expected to churn out new models and return to profitability by 2012. Provided there is a $1 billion injection from as yet unknown sources, first.
As befits such a bounce in prices as we have seen since the end of last week, the bulls and the bears are back to making statements that underscore their view. Inflection points in markets tend to elicit such posturing. Mining company executives-turned-market-technicians continue to assert that we will see not only $1250, but $1350 gold in the current year, and even multiples of same, in coming years. Most of this is predicated upon the arrival of hyper-aggressive levels of inflation, which, at the moment, remains curiously absent from the scene.
Over in the bear camp, the bets are aimed in the opposite direction (from $650 to $850 more or less), and are focusing on three important factors. First, that "the underlying physical market for gold, particularly the Indian demand that dominates trade in the yellow metal has atrophied at gold prices above $1,000, and this has happened right through the peak in annual demand dictated by the Hindu wedding season."
Second, that "despite the reams of commentary expended on the spectre of inflation, governments around the world know that in the near term the real danger actually remains a deflationary environment should they withdraw their various stimulus packages too soon."
Finally, the bears continue to acknowledge –in a quite Roubini-esque manner– that: "the boom in metals seen over the past year – base metals as well as precious ones – has been a function of a vast carry trade fuelled by investors funneling cheap dollars into riskier assets. As the dollar strengthens with the nascent US recovery, comparative eurozone fiscal concerns and the increasing likelihood of the US authorities tightening up monetary policy, this carry trade is now unwinding. Risk assets, including gold, are [seen as] falling as a result."
And then, there is the middle ground. Knowing that a core gold position has –and will always be- very useful. Divorcing the obsession over daily price gyrations from the intrinsic comfort that a life insurance policy for one’s other assets provides. Not backing up the truck to overload for the wrong scenario. Not following the oft-unwise ‘wisdom’ of the crowds. Recognizing bubbles, manias, and similar gut-driven events and not allowing them to take the intellect hostage to greed and/or fear. For the level-headed, we propose a quick breakfast read of this National Post article. Free (but priceless) advice by Andrew Allentuck, which, alas, will not prevent some from labeling him with what the Encarta Dictionary defines as an "offensive term that deliberately insults somebody’s intelligence or competence." Look it up.
Off to the World Money Show, here in not-so-sunny-but still very pleasant Orlando.
Happy Trading.
Jon Nadler
Senior Analyst
Kitco Metals Inc.
North America
Blog: http://www.kitco.com/ind/index.html#nadler
Check out other site market resources at Bullion Prices, Silver Coins Values and the US Inflation Calculator which easily finds how the buying power of the dollar has changed from 1913-2009.
