Metals update for June 4

Anticipation that Friday morning’s May jobs report from the U.S. Labor Department would reveal a "staggering" rate of job creation (the largest in 27 years) briefly brought bullion prices to under $1,200 during the overnight and early morning hours. The metal sank as risk appetite for equities rose and as safe-haven quests abated for the time being, and despite a fresh decline in the euro that depressed it closer to the 1.205 level. Bargain hunters in gold did become visible in the mid $1,190s, however, and bullion regained some composure.

There was some good news in the yellow metal’s fall to under the round figure, however. Namely, Indian bullion purchases (as mentioned in yesterday’s post) picked up a tad, as patient would-be buyers were finally rewarded with numbers that appeared as a long-shot odd earlier in the week. And, thus, buy they did, following several days of lackluster activity in the bazaars.

Imports of the yellow metal into the country-still the world’s largest consumer of it- dropped to only about 17 tonnes last month; a far cry from 2009’s near 29-tonne import figure. Reports indicate that more buyers are lined up under $1,190 per ounce –we just do not know if they will have a chance to fill such orders during the coming weekend or not.

While New York spot dealings opened with narrowing losses across the precious metals complex, the trade was still focusing on but one item this morning: the pivotal jobs report from the U.S. Spot gold fell $3.60 per ounce to start at $1204.20 while spot silver declined 14 cents to open at the $17.81 per ounce mark.

Gold could still be poised to try to test support around the $1181.00 level at this point, and RSIs have deteriorated in the wake of the latest correction. If however, sufficient numbers of bargain hunters turn out in short order, bullion might well retake and maintain above the round figure, albeit resistance is still manifest at the $1,120-$1,130 zone.

Platinum dropped $18 to $1,525, while palladium lost $10 to reach $439. Rhodium was quoted at $2600, and we noted a welcome (for investors) narrowing of the metal’s spread to $200 at last check. Meanwhile, the U.S. dollar was once again racing upward, by about 0.5 and getting closer to the 87.75 level on the index, while crude oil fell about a half a buck (to $74.10 per barrel).

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