Gold revived by EU inflation rate

The EU drew one step closer to hiking interest rates when it meets one week from today, as an unexpected rise in regional inflation rates virtually guaranteed that the ECB’s policymaking decision will not let rates remain where they are. Although markets have largely priced such a tightening into the equation, the euro got a boost from this morning’s data and set the US dollar on a slippery slope towards lower levels (under 76.00) on the trade-weighted index. That slippage, in turn, revived the bull camp in precious metals and sent gold prices back towards the high $1,430’s area within the first hour of trading.

Spot gold opened near the $1,430 mark and subsequently traded as high as $1,440.80 on the offer side. In the broader trading framework, resistance is still pegged at last week’s peak just above the $1,448.00 mark while support is seen at levels nearing the $1,400.00 round figure. The yellow metal is on course to finish the first trimester with an approximately 3.5% gain.

Then again, underscoring the “buy everything” attitude that prevailed once again among investors during the quarter, the DOW is on course to likely cross the finish line with a 6.7% gain on the trimester. What’s wrong with that picture? Pretty much everything that involves conventional thought in terms of historical correlations.

Silver traded near $37.75 at NY opening time but subsequently retreated to the near-mid-$37.00 level as the advance ran out of fresh speculative steam. Still, silver could finish Q1 with a better than 22% gain, underscoring the intense speculative attention it has been receiving. The Elliott Wave-based ‘must-not-cross-or-we’re-headed-higher’ price markers in the white metal are currently pegged at $38.21 and then at $38.47, while a breach of the $36.41 could portend a targeting of the $33.54 price level (and then lower). Platinum has risen 1.3% on the quarter, while palladium could be set for a 3% loss for the period.

Platinum and palladium each basically retained $9 worth of advances for most of the morning session; the former rose to $1,772.00 and the latter climbed to $760.00 per troy ounce. Speculators appeared to ignore the finding that analysts expect tomorrow’s US auto sales figures to show their first monthly decline in seven (largely on the back of the highest gasoline values in circa two years’ time).

The greenback was held down by the aforementioned advance in the European common currency, but also by a hefty gain recorded in the value of crude oil (at last check, it was up by nearly $2 per barrel, rising past the $106 mark) and certain agricultural commodities. This morning’s drop in US initial jobless claims filings was not helpful to the US currency as the report also contained an upward revision of previous figures. A slight decline in the Chicago Purchasing Managers’ Index for March and a drop of 0.1% in US factory orders also contributed to keeping the dollar on the defensive today.

A frightful first quarter concludes today, but without any concrete resolutions to the dramatic natural, economic, and political events that have defined it. Japan continues to grapple with the aftermath of the triple disaster that began on the 11th of the month, Libya remains mired in attacks and counterattacks between its opposing forces while NATO has taken command of the external military intervention, and certain parts of the EU appear as fragile as ever, roughly one year after Greece’s fiscal problems have first brought the acronym “PIIGS” into the world’s financial vocabulary.

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