Gold adds to fear premium for Libya and Japan

ABN AMRO analysts confirm that speculative activity in silver has been “quick to pile in” as reflected by a sharp recovery in net long positions on Comex since late January. Contract rollovers in the precious metals are not far off, and they have tended to bring plenty of intra-day drama to these markets on a historical basis.

As has been the case with a plethora of previous, non fundamentals-based spikes in the complex, the slightest amelioration in background geopolitical or socioeconomic conditions can lead to sizeable bouts of profit-taking and outright unwinding of fear-induced long positions. Those are the dime-turns that small investors generally end up being negatively impacted by, and which they have not historically had the good fortune to be able to see coming.

Platinum and palladium also opened with solid gains on Monday, helped by the prospect of the resumption of work at several Sony and Nissan plants in Japan as well as by renewed fund speculation in the complex. The recent sell-off in the noble metals gave rise to perceptions that certain value zones were being reached and/or breached (under $1,700 for platinum and under $700 for palladium) which then made for a compelling short-term play opportunity.

Platinum opened with an $18 per ounce gain, quoted at $1,739.00 while palladium showed a $13 per ounce rise to start off at $742.00 in New York trading action. The PGM niche did record what is being labeled as a “sharp decrease” in speculative positioning among non-commercial longs in the latest reporting period covered by CFTC data.

Crude oil touched levels above the $103 per barrel this morning as traders continued to monitor the situation in Libya and (perhaps more so) the relative calm in Saudi Arabia. Continuing unrest in Syria, Yemen, and Bahrain as well as uncertainty over the shape (and makeup) that governments in Egypt and Tunisia will take has kept black gold on the boil in recent days.

For the time being, Iran and Saudi Arabia (two of the leading suppliers of oil) have managed to avert larger social upheavals either by force (the former) or by concessions (the latter). However, that complex MENA situation is not expected to resolve itself either, in coming days. Staying tuned for “breaking news” alerts on one’s closest screen will prove to be the wisest course of action, for yet another possibly tumultuous week.

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