Metals update for May 24

Bullion prices snapped back from a five-session losing streak as the opening of Monday’s overseas markets brought with it a weaker euro and renewed worries about the fate of the same.

Albeit parts (Germany, Switzerland) of the Old World (and the Canadian part of the New One) was on holiday today and there was little in the way of economic data to pin trading speculation upon, Spain’s weekend seizure and bailout of a domestic lender (Caja Sur) helped dent the emerging recovery in the euro and gave the U.S. dollar (and gold, with it) a further boost. Thus, the yellow metal rebounded from last week’s $1166 lows and climbed back towards the mid-$1180 as the new trading week go underway.

Some fresh albeit modest physical buying was noted over the weekend in India as dealers indicated that locals were trying to step ahead of an expected recovery this week but would likely buy more should prices revisit the $1150-$1175 value zone. At least one technical market observer finds that a break through the $1207-$1210 zone is required of gold – and this week to boot - lest the metal heads towards the low $1120s-$1140s.

Fresh, crystal-ball-inspired predictions (from the usual suspects in the managed fund universe) were also issued as the new week got underway and the rise in metals reawakened the hyper-bulls. A wide fan of future prices was on offer, ranging from $2K to $10K. “Fundamentals? We don’t need no stinkin’ fundamentals. We have something better: Predictions!” If that all feels/sounds/looks like a replay of the oil market circa 2008, you’ve seen that movie too. As for now, oil is in the driver’s seat of things pointing to…deflation.

New York spot markets opened with across-the-board price gains in the precious metals complex. Gold’s bounce extended to the noble metals complex as well, where last week punishing of prices appeared to finally elicit some bargain hunting amid perceived-to-be oversold conditions. Spot gold gained $6.40 at the start of the session, opening at $1183.40 as against a slip in the euro to 1.236 and a robust 0.87 gain in the US dollar index (to 86.29).

Bulls would like to quickly recapture the $1200+ range and gun for the $1250 high once again, and are hoping to put the mini-liquidation wave that hit the markets last week into the ‘closed’ file. Crude oil showed little in the way of change, losing only pennies and hovering just under the $70 per barrel mark.

Silver rose 14 cents to open at $17.78 per ounce. A gain of $19 was on tap for platinum and it climbed to the $1524 level following a ten-day period of intense volatility and losses on the order of $200+ per ounce. Similar buoyancy was noted in palladium; it added $10 to rise to the $444 level after having shed $120+ during the aforementioned period. Players will focus on equity market performance (or lack thereof) as the week gets underway.

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