Gold steady ahead of housing and Fed meeting

Good Morning,

Gold prices opened with minor losses on Tuesday morning as market players held their cards steady ahead of US housing starts numbers and the post-Fed meeting microphone session. Spot bullion slipped $3.70 per ounce to start the session at $1,274.80 following overnight lows near $1,272.50 per ounce. Not much here that can be labeled as anything resembling profit-taking or correction. Indian gold shoppers remained sidelined for yet another day, as near record price tags offered nothing in the way of incentives to lure them out to local dealers during the present festival period.

Silver fell one dime at the opening bell and was quoted at $20.63 on the bid side. Meanwhile, modest profit-taking did manifest itself in noble metals with platinum dropping $8.00 to $1,615.00 and palladium shedding $9.00 to $528.00 per troy ounce.

Rhodium, on the other hand, continued and built upon yesterday’s $130.00 advance and added $30 more to rise to $2,290.00 this morning. In the background, the markets witnessed a softer US dollar (pre-Fed sellers out on a sortie) at 81.03 on the index, and a slipping oil price (down nearly $1 to $73.90 per barrel).

Several declarations made in various parts of the world appeared to leave crisis-oriented and crisis-dependent investors relatively unfazed over the past 24 hours, as they continued to pile bet upon bet in asset sectors that effectively constitute a contradiction of such assertions.

First, the statement made by the US-based National Bureau of Economic Research yesterday, that the contraction that started in late 2007 in the USA came to an end in June of last year. If ever there was a finding met with more howls and expressions of disbelief as regards economic statistics, this has to be the one that took the proverbial cake.

The NBER nowhere near concluded that conditions have been rosy since the slow climb-out began last summer, or that the US economy is running at anything that can be considered a ‘normal’ pace. Such details were ‘lost in translation’ on every single skeptic who accused the research body of being out of touch with reality and chose instead to focus on hammering home other points made in the report (such as the fact that this was, indeed, the longest such economic swoon since the Great Depression).

The NBER also opined that if in fact a dip does come about now or in the near future in the US economy, it would have to be considered as a separate event with a life of its own, rather than being seen as the second leg of a “W” or similar continuation pattern. For the moment, one might as well advise the NBER to either buy some megaphones or write their report in all-caps, as hardly anyone chose to hear it.

On the same day as that report was issued, Europe’s biggest bond dealers declared that ‘the worst is over for the eurozone’s most indebted nations.’ “Say what?” say the naysayers. “At a time when bets show that Greece is still expected to sink into the Aegean, and Ireland is seen as turning brown from its current colour?” Never mind the equally successful sale of Greek and Spanish bonds.

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