Gold Edges Slightly Higher, Silver and Platinum Advance

US gold on Thursday snapped a three-day losing streak, but only by a smidgen with a 10 cent gain on the day.

Silver and platinum climbed as well, registering respective increases of 0.8 percent and 1.4 percent.

Oil climbed also, but as gingerly as gold, with a 2 cent gain. US stocks rose for a third straight session, as both the Nasdaq and S&P 500 hit 18-month highs.

New York precious metal figures follow:

• Gold for April delivery edged up to $1,108.20 an ounce. It ranged from $1,100.50 (a two-week low) to $1,111.70.

• Silver for May delivery rose 14.2 cents to close at $17.160 an ounce. It ranged from $16.835 to $17.180.

• April platinum gained $22.50 to $1,612.70 an ounce. It ranged from $1,577.10 to $1,613.00.

In PM London bullion, the benchmark gold price was fixed earlier in the North American day to $1,104.00 an ounce, which was a decline of $16.50 from the price on Wednesday. Silver lost 56 cents to $16.910 an ounce. Platinum was settled at $1,580.00 an ounce, falling $25.00.

Notable bullion quotes follow:

"Demand is certainly visible in the $1,101-$1,105 range and that is probably helping the metal from an immediate crash," Pradeep Unni, an analyst at Richcomm Global Services in Dubai, said in a report cited on Bloomberg. "Investment demand is clearly on a slippery note."

"Gold prices stabilized somewhat in the overnight markets after having fallen to their weakest level in over two weeks yesterday. The unwinding of speculative positions that followed the metal’s inability to keep pushing higher engendered technically-induced stop-loss selling and brought bullion down to very near the $1100 level that we had been assured we will not see again this season," wrote Jon Nadler, senior analyst at Kitco Metals, Inc.

"Whilst no single factor was identified as the catalyst for the sharp slide, several analysts opined that the recent Chinese statements regarding the country’s unwillingness to please the perma-bulls by loading up on massive gold tonnage for its reserves may have certainly played a significant role in the waning of bullish sentiment in the market." [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 prices rose slightly "as a weaker dollar helped offset Chinese inflation data that had increased concerns about further tightening measures and declining oil demand," wrote Nick Godt of MarketWatch.

Consumer prices in China rose 2.7 percent last month, marking a 16-month high.

"Accelerating inflation in China raises the possibility of an interest-rate hike," Terrace Chum, who helps manage over $5 billion for MFC Global Investment Management in Hong Kong, said on Bloomberg. "The government wants to prevent the economy from over- heating. It may slow growth, but the recovery is on track."

New York crude oil for April delivery rose to $82.11 a barrel.

The national average for regular unleaded gasoline advanced eight-tenths of a cent to $2.776 a gallon, according to AAA fuel data. The current average is 7.0 cents above last week, 13.2 cents more than a month back, and 83.8 cents higher than the average from a year ago.

U.S. Stocks

U.S. stocks rose "erasing earlier losses to lift the Nasdaq and S&P 500 to 18-month highs, as investors eyed the day’s jobs and trade news and the direction of the U.S. dollar," wrote Alexandra Twin of MarketWatch.

China’s increased inflation was noted by investors as well.

"Obviously, inflation is a concern on a global basis," Tom Wirth, senior investment officer at Chemung Canal Trust Co., which manages $1.6 billion in Elmira, New York, said on Bloomberg. "China has led us out of the global recession. If they raise rates too far, too fast, that’s going to slow the world down. I don’t think it’s a problem right now, but there’s always an overreaction from investors."

The Dow Jones industrial average gained 44.51 points, or 0.42 percent, to 10,611.84. The S&P 500 Index climbed 4.63 points, or 0.40 percent, to 1,150.24. The Nasdaq Composite Index advanced 9.51 points, or 0.40 percent, to 2,368.46.

Gold, Silver, and Metals: Prices and Commentary – March 11, 2010

by Jon Nadler, Kitco Metals Inc.

Mr. Big(gs) & Mr. Slim. Neither Small, Nor Thin – in $$$

Good Day,

Gold prices stabilized somewhat in the overnight markets after having fallen to their weakest level in over two weeks yesterday. The unwinding of speculative positions that followed the metal’s inability to keep pushing higher engendered technically-induced stop-loss selling and brought bullion down to very near the $1100 level that we had been assured we will not see again this season. Well, it turns out that we did see a sub-$1100 per ounce print already this morning…

Whilst no single factor was identified as the catalyst for the sharp slide, several analysts opined that the recent Chinese statements regarding the country’s unwillingness to please the perma-bulls by loading up on massive gold tonnage for its reserves may have certainly played a significant role in the waning of bullish sentiment in the market.

Adding to the dissipation of such sentiment were euro-Greece-EC-flavoured news, or we should say, the absence thereof — which gave speculators additional confidence that the crisis may be finally abating despite concrete, headline-worthy solutions. The markets certainly did not appear to be concerned too much about the news that many a Greek hospital, airport, or school was shuttered, or that the Greek police had run-ins with strikers.

Bloomberg reports that "Greece’s unions staged the second general strike this year against government budget cuts to curb the European Union’s biggest deficit." One small detail worth noting as these protests roll on: demonstrators in Greece hurl marble slabs at police. Now there is a classy departure from the mundane rock-hurling seen in other countries… Finally, the one item we mentioned as early as yesterday morning — China’s rising imports of ‘stuff’ also gave rise to certain fears about that government’s possible tightening of various monetary screws intended to avoid things from bubbling over into a frothy mess.

This morning’s price action in New York was reflecting continuing selling pressure and brought the $1095 support zone into the crosshairs once again. While the gold market opened with only a minor $1.20 loss (at $1107) the selling soon reignited and pushed values to $1099.50 –chalking up an $8.70 loss and touching a level not seen since the 24th of February.

Thus, instead of chasing the January high target of $1162.50, the yellow metal now finds itself hoping to be able to maintain the $1100 level and prevent a fall towards the mid-$1K’s, all while searching for those ever-welcome bargain hunters, be they from Mumbai, Dubai, or Shanghai. Or, perhaps, even from nearby Wall Street.

Many of Wednesday’s sellers however were spec funds cashing in on recent profits. At this point, we expect the high $1090’s -$1100 area to indeed be able to provide support, but the market appears in no mood to have to digest further unfriendly news. Like, say, some IMF tonnage coming to the open market in a small tranche. In any case, let’s see that Indian buyers show us over the weekend. Deal, or no deal?

Silver opened with a 2-cent loss at $17.01 and then slipped towards $16.90 per ounce as sellers of that metal also made their presence felt this morning. Prior to yesterday’s action, the white metal was showing a pattern that gold failed to confirm and –according to Elliott Wave analysis- might now be poised to lead a downtrend reversal in prices. Look for a break of $15.59 and an eventual objective of under $14.63 per ounce, say analysts at EW.

Platinum started the session with a $14 drop this morning, quoted at $1579.00 per ounce, while palladium fell $12 to $450 the troy ounce. No change was reported in rhodium’s spot bid — still at $2400.00 per ounce.

The US dollar was not showing any significant changes as of the time the markets opened in the precious and noble metals. The dollar index was actually off by 0.02 at 80.39, while the greenback traded at 1.365 against the euro. Crude oil slipped about half a dollar, to trade at $81.67 per barrel, as the aforementioned Chinese tightening-related apprehensions resurfaced.

Within the first hour of trading however, the dollar advanced to very near 80.50 on the index, as falling US unemployment filings and a narrowing trade deficit figure dented sentiment in commodities anew. Once again this morning, we were on the receiving end of stories alluding to the possibility of imminent Chinese tightening on the back of recent statistical reports showing that whiter shades of "hot" as still the colours being sported by country’s economy.

Inflation in China also picked up last month, reaching an unwelcome 2.7% rate-also not a good omen for continued stimulus measures to remain in place. No such "luck" for Japan however, whose GDP for Q4 shrank at a 3.8% annualized rate.

Japan’s GDP deflator showed a 2.8% annualized decline. Japan is plodding through its worst deflation on record and fears are rising that the "lost decade" might turn into the "lost quarter-century" if things continue on their current path. There is such a thing as "desirable levels of inflation" –as one politician was heard hoping for on local television not long ago…

As for US television, well, depending on your preferred news outlet, the story is that Mr. Obama is utterly destroying the country, the currency, and that the stock market is about to fall to (pick your favorite target number) 1000, 3000, 5000 — and meet the price of gold itself, no less. Convinced? Think again, and think hard. Or, simply read the following story, courtesy of Bloomberg. A few… surprises may be in store. Herewith, just a few, "teaser" highlight quotes:

"Laszlo Birinyi will never forget the moment a year ago when the last ounce of confidence disappeared. "At turning points, the mood is always in one direction," says the 66-year-old Birinyi, who characterized the "total conviction" of pessimists as the start of an advance that would end up making Barack Obama‘s first year in office the best for shareholders in 76 years. What’s more, the Standard & Poor’s 500 Index, which gained 69 percent in the past 12 months, is nowhere near its peak in a rally that may persist through the next presidential election, he says.

"The advance that started a week after Obama called U.S. stocks a "potentially good deal" for long-term investors is too young to end now, according to Birinyi. The average bull market since the 1960s has lasted more than 1,000 trading days, compared with 253 for this one, data compiled by Bloomberg and Birinyi Associates show."

"I’m very struck by the level of bearishness everywhere I go," said [investor] Barton Biggs, who predicts the next move in U.S. stocks is a 10 percent to 15 percent gain. "I’m not obsessed with history. I’m bullish because I think the global economic recovery is on track and is going to be surprisingly strong. The world was falling apart in 2009. There’s been a tremendous change."

"Birinyi says this bull market may last more than 1,023 trading days, the historical average, putting its end after April 2013. Customers of his firm have pushed up assets under management to about $300 million from $200 million in 2007 after his prediction for gains came true."

Yes, the above are both starkly contrasting views such as those being offered up in heaps by folks such as Richard Russell, Peter Schiff, and others of similarly pessimistic leanings. However, there should be sufficient room out there to take Birinyi and Biggs into account as well. After all, the two have made quite a name for themselves at this game. Not quite the caliber of, say Carlos Slim — the employer of more than a quarter million Mexican workers- but rich enough (and obviously savvy enough) to count. That said, nothing says you now must dump your core 10 percent gold holding in order to go out and buy some stock you just learned about. It’s all about holding a variety of assets for different objectives. Playing it safe never goes out of style.

Happy Buy and Hold, or Happy Buy and Trade –as the case may be.

Jon Nadler
Senior Analyst

Kitco Metals Inc.
North America 

Check out other site market resources at Live Gold Spots, Silver Coin Melt Calculator and the US Inflation Calculator which easily finds how the buying power of the dollar has changed from 1913-2010.