New York gold futures climbed slightly on Tuesday, hitting a 4-week high despite a stronger U.S. dollar and overnight profit-taking. Silver and platinum, however, retreated.
In other markets, crude oil advanced to a 17-month high while U.S. stocks ended mixed, with the S&P and Nasdaq rising modestly but enough to hit fresh 18-month highs.
New York precious metal figures follow:
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Gold for June delivery advanced $2.20, or 0.2 percent, to $1,136.00 an ounce. It ranged from $1,123.50 to $1,139.60 — the highest price since March 5.
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Silver for May delivery fell 18.7 cents, or 1.0 percent, to $17.931 an ounce. It ranged from $17.845 to $18.105.
- July platinum declined $5.30, or 0.3 percent, to $1,704.50 an ounce. It ranged from $1,681.50 to $1,713.20.
In PM London bullion, the benchmark gold price was fixed earlier in the North American day to $1,132.75 an ounce, which was $9.25 more than the price on Monday. Silver was 23 cents higher at $17.920 an ounce. Platinum was settled at an even $1,700.00 an ounce, gaining $40.00.
"We’re still seeing physical demand…particularly out of Asia. The minute (gold) drops to around $1,120 we see some buying coming in," Walter de Wet, an analyst with Commerzbank in Frankfurt, said on MarketWatch.
"Our strongest conviction is for a rebound of auto-related platinum-group metals demand as worldwide vehicle production rises, forcing a restocking of the metals inventories run down in 2009," London-based UBS AG analyst Edel Tully said in a note that was cited on Bloomberg. Platinum and palladium will outperform gold, she said.
"Since gold and the euro have acted like conjoined twins of late, the slide in the common currency triggered overnight profit-taking in the yellow metal," wrote Jon Nadler, senior analyst at Kitco Metals, Inc. "Indian buyers finally made more than a tentative appearance at the local gold outlets and were seen picking up a better quantity of wedding season-related ornamental gold." [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 "after seesawing most of the day as optimism about energy demand trumped bearish factors such as a rising dollar and shaky stock market," reported Polya Lesova and Claudia Assis of MarketWatch.
"Oil has moved higher in anticipation that demand is coming back," David Greely, senior energy economist at Goldman Sachs Group Inc. in New York, said on Bloomberg. "Positive economic news has helped push prices into the $85-to-$95 range."
New York crude oil for May delivery rose 22 cents, or 0.3 percent, to $86.84 a barrel — the highest level since Oct. 8, 2008.
The national average for regular unleaded gasoline rose two-tenths of a cent to $2.830 a gallon, according to AAA fuel data. The current average is 3.5 cents higher than last week, 8.3 cents more than a month back, and 79.1 cents higher than the average from a year ago.
U.S. Stocks
U.S. stocks rose slightly "as the banking sector got a lift from positive analyst comments, while minutes from the Federal Reserve’s last meeting eased concern over rising rates," wrote
Leah Schnurr of Reuters.
"The Federal Reserve is going to continue to allow money to slosh into the markets for a much longer period than they normally would because this was a much deeper recession than usual," William Smead, chief executive officer of Smead Capital Management, which oversees $175 million in Seattle, and portfolio manager of the Smead Value Fund, said on Bloomberg. "Any signs that indicate that that elongated period is going to go on is bullish for stocks."
The Dow Jones industrial average retreated 3.56 points, or 0.03 percent, to 10,969.99. The S&P advanced 2.00 points, or 0.17 percent, to 1,189.44 — the highest level since Sept. 26, 2008. The Nasdaq Composite Index climbed 7.28 points, or 0.30 percent, to 2,436.81 — the best point since Aug. 15, 2008.
Gold, Silver, and Metals: Prices and Commentary – April 6, 2010
by Jon Nadler, Kitco Metals Inc.
The US dollar once again picked up some serious tailwind and surged ahead on the trade-weighted index as the overnight trading hours unfolded. The greenback reached towards the 81.50 mark and notched gains against the euro (last seen at 1.338) as the latter fell for a third day on apprehensions engendered by Greece’s putative desire to bypass the IMF if conditions deteriorate to a point where it will need help. This latest posturing by Greece has placed the recently crafted rescue package (one that contained a hybrid EU-IMF assistance construct) into question and has rekindled negative sentiment against the euro.
Since gold and the euro have acted like conjoined twins of late, the slide in the common currency triggered overnight profit-taking in the yellow metal as well. Gold backed off from four-week highs –precisely at the EW resistance point of 1134.50 mentioned in yesterday’s post- and fell to an overnight low of $1122.00 per ounce.
Similar moves to cash in some handsomely profitable chips were observed in the white metals. Platinum and palladium were the stand-out overnight decliners as $1700+ and $500+ proved to be a bit frothy for some specs. Such was certainly not the case in copper however, as the orange metal vaulted above the $8K per tonne price marker, adding more than 1.6% in gains on the LME. Copper has gained 86% over the past year as specs have pushed hard to the upside, emboldened by their perceptions of the global economic recovery’s strength.
Indian buyers finally made more than a tentative appearance at the local gold outlets and were seen picking up a better quantity of wedding season-related ornamental gold. Also helping the Indian gold shopping spirit overnight was a stronger rupee –the currency traded at year-and-a-half highs at one point, making dollar-denominated gold a bit more attractive than previously. The local ‘season’ for getting hitched runs through next month.
Over in Vietnam, the local central bank is grappling with how to mobilize the circa 500 to 600 tonnes of bullion that are believed to be located under countless beds of the country’s denizens. In recent years, some of the occupants of said beds have deposited such gold at banks which offered quite attractive interest rates for the stuff. The State Bank believes that the gold tonnage- if mobilized- could offer a pool of capital for economic development that is quite desirable. In the interim, the string of restrictions, law changes, trading and conversion regulations keeps arguments and controversy at a heated level.
New York spot metals dealings opened mixed this morning, with assorted losses and/or small gains in the complex. Gold fell $4.40 to $1126.40 per ounce, while silver lost 14 cents to start the day at $17.92 the ounce. No change was recorded in platinum, which opened at $1703.00 per troy ounce, while palladium climbed $2 to start at $503.00 this morning. Quick, give me back those chips! They still look attractive!
Meanwhile, Sydney-based Resource Capital Research (RCR) is "moderately bearish" on the medium-term outlook for gold, saying it expects bullion to trade in the $1 050/oz to the $1 100/oz band for the rest of 2010. RCR also said that after the "speculative surge" the market experienced November and December of last year, gold is now back to the dollar-inverse game — only this time, in the opposite direction.
"We are moderately bearish on the outlook for gold in the medium-term because we consider that the current uptrend for the US dollar could continue, particularly when taking into account the status of most of the currencies the greenback is measured against," said RCR. "We consider that gold’s supply-demand fundamentals also tip the balance towards further gold price weakening," the firm’s spokesman added.
Rhodium remained static this morning, quoted at $2530.00 per ounce. See a special section on this mysterious metal, below. Crude oil remained near 17-month highs, around the $87 per barrel ahead of US gasoline supply levels data due later on. The surge in black gold has pushed the loonie to parity with the greenback for the first time since 2008.
Yesterday’s ISM data revealed that service industries in the USA grew at their fastest rate since May of 2006. The figure offered by the ISM was 55.4, and it overshot economists’ expectations. The statistics imply that the US recovery is gaining some serious traction and that jobs creation is spilling over into the service sector and is no longer confined to manufacturing.
In the interim, various central banks are going their own way in dealing with local conditions as best they can. Australia’s central bank hiked its benchmark rate to 4.25% -the fifth such increase in six meetings it has held. The bank’s Governor, Mr. Glenn Stevens, has recently warned that Aussie house prices might be getting out of hand and signaled that he has little desire to follow the US ‘model’ anytime soon, and that the spectre of inflation is not welcome Down Under.
No such worries however on a global level, as the clear and present danger remains that of falling into Japanese-style deflation — if one takes their eyes off the economic radar. Core OECD consumer prices rose by a record low 1.5% in February. The weathervane continues to point to dis-inflation in the 30 countries that are part of the OECD, and growth rates for the group are projected at but 1.9% for the current year. This leaves the output of the group about 4% under capacity. Slacks are in fashion, worldwide, while alarmists continue to frighten us with the imminent resurrection of the Weimar Republic’s inflation levels.
Kitco News reporter Daniela Cambone recently interviewed CPM Group NY’s head Jeffrey Christian and talked with him about rhodium. Yes, the oft-overlooked noble metal that spiked to a number that is generally associated with the golden dreams of hardcore gold bugs -$10K per ounce. The unique metal –along with many commodities- has since (mid-2008) come down to terrestrial levels and appears to hold promise on several fronts, including the one related to its future possible price.
Ms. Cambone reports that "demand for rhodium, a key element in catalytic converters, is expected to increase as automobile markets in China and emerging countries continue their rapid growth." Indeed, as this writer will report at the Rare Metals Conference in Los Angeles later this week, robust car sales in several thriving regional pockets and the expected resurgence of North American and Western European automotive sales is likely to be…driving rhodium forward, and could…steer it back towards a significantly higher annual average price level.
Mr. Christian observed that "In the United States auto sales will probably be 10 to 15 per cent higher than they were last year. When you sell a car pretty much anywhere in the world you need a catalyst on in, so that means more platinum, palladium and rhodium." Medium-term projections made by the CPM Group have called for a return towards an annual average of $4000+ for rhodium. Unlike other metals that are employed in auto catalyst applications, rhodium cannot be substituted with less costly alternatives. Thus, automakers have little choice but to purchase the metal when inventory levels dictate so.
We have little left for today, but to wish you:
Happy Trading.
Jon Nadler
Senior Analyst
Kitco Metals Inc.
North America
Blog: http://www.kitco.com/ind/index.html#nadler
In addition to the bullion 2010 American Silver Eagle that is already available, the United States Mint this year will also issue the Grand Canyon America the Beautiful Silver Bullion Coin. Click on the link to learn about the coin and the new bullion series from the Mint.
