Metals update for March 23

Gold prices first rebounded above the $1100 pivot point then slipped back towards the $1090 level as overnight dealing were somewhat more active than in previous sessions. Continuing US dollar strength was manifest with a tick above the 81.00 mark on the trade-weighted index and a further slip to the 1.35 level being visible in the euro. Tuesday’s spot market opening showed mild losses in the precious metals complex, with platinum once again pacing the group to the downside.

Gold started the New York session off with a $4.50 loss, quoted at $1098.10 as the European jitters kept things on the boil for the dollar (and against the euro) and pressured crude oil as well (although black gold held up reasonably well, losing only 43¢ to $81.17 per barrel). Silver was off by 14¢ at the start, opening at $16.82 per ounce. Platinum dropped $13 to the $1587.00 level, while palladium lost $7 to ease down to $448.00 per troy ounce.

The markets’ yo-yo action continued after the opening bell, and as the dollar index slipped under 81, the metals complex staged yet another comeback. Gold was able to recapture the $1100 level and traded several dollars above it for a while. Dealers we spoke to in New York attributed the mid-morning pop in values to poor U.S. housing sales data which was seen as denting the dollar and thus helping bullion. Sure, it all makes sense. Poor data sparks an appetite for risk taking.

No change was reported for rhodium at last check, where spot bid stood at $2310.00 per ounce. Market researchers at London-based GMFS opine that gold may decline to the $1030.00 per ounce area in coming weeks, not only as the dollar gains further traction from risk-averse investors, but as general demand for commodities shows signs of softening following India’s surprise interest rate hike last week.

Market analysts at Commerzbank, over in Frankfurt, feel that although gold may not remain under $1100 for an extended period, there appears to be some erosion taking place in the levels of private investor demand for the yellow metal (as in: this may well be a crisis, but we have already had the Mother of All Crises, and it seems to have passed). This echoes the findings of the Austrian Mint, which we reported just the other day. Holdings in the GLD remained static for an eighth session on Monday. More on that topic, further below.

Jon Nadler, Senior Analyst for Kitco Metals Inc.,North America US & Canada, Websites: www.kitco.com and www.kitco.cn Blog: http://www.kitco.com/ind/index.html#nadler

About the Author
Jon Nadler Jon Nadler is a Senior Analyst at Kitco Metals Inc. North America
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