Gold at two-month low as ETF outflows continue

On the other hand, platinum prices managed to climb $10 at today’s market opening, rising to $1,819.00 per ounce. Palladium was ahead in price as well, showing a $3 gain at the $813.00 mark per ounce. Meanwhile, rhodium added $10 of its own to bid values, and was quoted at the $2,390.00 per ounce level.

The noble metals do not appear to be lacking buyers amid news that, for example, China imported 40% more of one of the group’s components (platinum) last year. Albeit the Chinese government is now placing some restrictions on new car registrations in the current year, in an effort to address nightmarish urban traffic conditions in the country, the nation’s car sales are still on track to eventually show a 10 to 15 percent annual gain in 2011.

And, since China was very much on player’s minds during the metals’ meltdown this week (something we alluded to in the first part of the Kitco 2011 Precious Metals Outlook recently), let us take a small excerpt from a Reuters Q&A on the topic of Chinese policy; specifically as regards that scary word: “tightening.”

Q: HOW will they do it? Answer:

“A slew of measures are likely including higher interest rates, tougher reserve requirements, faster currency appreciation as well as administrative measures such as bank lending restrictions, property market curbs and price controls. Their total impact, however, is likely to be more gradual than heavy-handed. In monetary policy, the central bank will rely mostly on required reserves, because they are seen as a softer alternative to interest rate increases and it can change the requirements without seeking cabinet-level approval.

Some analysts think the required reserve ratio could climb to as high as 23 percent by December, from a record 19.5 percent now. On rates and the yuan, investors reckon authorities will be far less forceful. The market consensus is for interest rates to rise 50 basis points by the second half. For the yuan, analysts believe gains will be capped at about 5 percent this year. The China Securities Journal, an official newspaper, said on Friday that the next interest rate increase could come as soon as the Chinese New Year holiday in early February.

There has also been a debate about lending curbs, with the central bank pushing for a lower ceiling than other government agencies. But with the bank regulator pushing this week for a quick halt to off-balance-sheet lending, the indication at present is that Beijing is indeed pulling in the reins, aiming to cap new loans at about 90 percent of last year's total.”

Until next week, take care, and we hope to see you ALL (well, most of you anyway) at the upcoming Vancouver Resource Investment Conference in that most beautiful of Canadian –indeed, world- cities.

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

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