Gold & silver grind higher

Looking for all the world like a typical December holiday session, the overnight market action dragged on indecisively in gold an in silver. No lack of upside progress was however on display in the noble metals’ complex, where participants continued to push prices higher. Most of the tenor of the early trading activity was still shaped by a eurodollar situational affair and few players jumped ahead into fresh positions ahead of the ECB rate decision announcement. That one was not hard to pre-guess given the background of uncertainty still ruling the skies (aside from the heavy snow clouds) over the Old World.

Mr. Trichet’s office left “well enough” alone, for the time being, rate-wise (1% is the order of the day). It is now up to the man himself to let the inquisitive folk at his upcoming press conference know just what the ECB will be up to in the near future, as regards further bond-buying plans and/or the eventual unwinding of its special liquidity actions. And, evidently, what the ECB will be ‘up to’ –at least until the end of Q1 of 2011 is…more of the same (bond-buying and ‘special’ liquidity measures). Not exactly a recipe for a strong(er) euro.

In fact, most foreign exchange strategists polled by Reuters recently opined that the common currency will continue to struggle against the U.S. dollar and that one will likely find it trading at $1.31 (same as today) in one year’s time (and not even at the $1.33 that had been projected by the same respondents just last month). However, Spain this morning did manage to successfully sell 2.5 billion euros’ worth of bonds (five times as much as Portugal also successfully marketed yesterday) and with that sale, managed to quell contagion fears (for at least the duration of the weekend).

New York market opening time had little in the way of variety to add to the overnight trading patterns and ranges in gold and silver. The yellow metal opened the Thursday session with a $1.80 per ounce gain and was quoted at $1,388.40. Silver was showing only a few early signs of weakness, opening with a two penny loss at $28.40 per ounce on the bid-side.

This morning’s jobless claims put a bit of a damper on yesterday’s jobs creation statistics. The dollar however refused to roll over and slip away on the news, at least initially. Gold and silver remain poised to try to penetrate the $1400 and the $29 levels respectively, but it will take some more dollar selling and light treading as resistance levels come into sight.

Platinum continued to burn rocket fuel, rising $18 off of the Thursday morning market launch pad –at $1,706 the ounce. Palladium advanced $7 to the $739 per ounce mark, while rhodium added $10 to open at $2,270 per troy ounce. Yesterday’s GM car sales report looked quite encouraging, as they tallied an 11.4% gain in the number of pieces of rolling iron that were moved off of dealer lots in November.

Car industry sales were up 17% over November of 2009. The average age of the U.S. private auto fleet is 10 years. Rising employment gives confidence (and the means) to seek replacing that aging clunker in the driveway. Little wonder then, that the noble metals are sparkling this week. Just use caution, as hedge fund and ETF activity remains quite visible at this time as well.

Chinese gold imports soared in the first 10 months of 2010 as local investors ran for cover against what their government has now recognized is Public Enemy No. 1: inflation. The country’s investment oriented demand for the metal may reach 150 tonnes in the current year (as against 105 tonnes in 2009). However, surprises could still be in the cards for those who see Chinese inflation (and potentially related gold buying) on strictly a one-way street to the stratosphere.

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