Metals update for April 1

Gold prices held steady in the $1110-$1120 range overnight, but then again, so did the U.S. dollar near the 81-mark on the index, while the euro followed suit and parked just under the 1.35 level once again. Dowry-related Indian demand was noted in the overnight hours, but little else was on offer in the market news flows on this first day of April ahead of tomorrow’s (and Monday’s) market closures.

Gold opened with a $2.40 gain at $1116.00 per ounce in New York amid fast-thinning participation. As yesterday, we cannot rule out out-sized moves for later in the day, but the pivotal market item –tomorrow’s U.S. employment data- will be met with a closed trading floor, thus it’s all going to be a bit of an anticipatory day in nature. Resistance in gold remains in place overhead at the $1130-$1135 levels.

Silver added 24¢ this morning, to open at $17.72 the ounce. Platinum gained $10 and palladium rose by $8 on continued intense ETF courtship. They were quoted at $1653 and $486, respectively. Rhodium was higher again, quoted at $2530.00 per troy ounce.

Questions once again arose about China’s growth and manufacturing output. The Wall Street Journal said that: “Even the world’s most gifted economists cannot figure where all the manufactured goods are going.” And then concluded that: There are really only three options:

· “The first is that the consumer buying power in China is growing at rates that are both unprecedented and unexpected” This could be true, but it appears highly unlikely.

· “China could be manufacturing goods at such a rapid rate because its trade partners are doing extraordinary well.” The evidence for that is notably absent in various nations’ GDP figures.

· “China may be in the process of sending goods abroad which it has made at below-market prices and sold at below-market prices.” Quite plausible, and what a dollar-yuan standoff could it lead to!

Or, perhaps, the Wall Street Journal theorizes, “China’s $585 billion stimulus package may have done its work in ways that were unexpected. Consumer borrowing may have lifted off even if employment did not. That means that Chinese consumer is following the American consumer down that path of leverage. The end point of that path is known all too well in the US.”

The Journal then warns that: “Under almost any circumstance, Chinese growth, on fire again, cannot continue for too long.” – Alas, no metrics were given for “too long.” Thus, we wait and watch.

With the market news channels being bereft of news of an immediate impact nature, we decided to take a look at some other stories of potential interest to our audience. On Tuesday, for example, CNN.com reported that Scientists in Geneva marked a "new territory" in physics, by smashing two proton beams at record high energy rate. Scientists cheered Tuesday's historic crash of two proton beams, producing three times more force than researchers had created before and marking a milestone for the $10 billion Large Hadron Collider.

Jon Nadler

Senior Analyst, Kitco Metals Inc. North America

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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