Gold feeling stable after ECB rate hike

Precious metals trading opened on a mixed note this morning as the trade parsed the various statements coming out of the Brussels, Lisbon, London and Tokyo for clues as to what tenor today’s market betting might take on. No surprises were detected in such announcements, and thus a bit of stability is what defined the first hour of trading action. Spot gold traded from up 80 cents on the open to down $2.10 cents shortly thereafter, but remained largely in orbit around the $1,460.00 level.

Silver oscillated between an opening gain of two pennies and a subsequent flat-to-slightly-down (12 cents) quote but it also remained very close to the vicinity of the $39.50 pivot point. The upside potential remains in place for both the yellow and the white precious metals. Gold might be aiming towards a possible peak between $1,480 and $1,530 while silver is already more or less but $10 beneath its 1980 record. A break beneath $36.50 would be needed to shake the confidence levels (make that uber-confidence, at nearly 95% bullishness this week) among the specs and the retail public.

Even as Elliott Wave patterns point towards potentially higher price ground in gold, Hulbert contrarian analysis concludes that the metal’s rally is built on “shaky ground” and that “you should be able to buy gold in the next couple of weeks at lower prices than today’s lofty levels.” One cannot recall Mr. Hulbert frequently (okay, ever) using the word “lofty” to describe gold prices. Market timers obviously do not see it his way. Therein lies the bugaboo, says Mr. H. in his Thursday take on the market (at Marketwatch.com).

The two more clear losers at this morning’s New York opening were platinum and palladium. The former lost $5 to ease to the $1,786 mark while the latter fell $2 to start the session at $782 per ounce. The duo lost more ground as the morning’s action among players appeared to be driven by “selling the fact” (of the ECB rate action).

In the background, crude oil continued its gravity-defying high-wire act and rose another 36 cents to touch the $109.19 per barrel price level, while the US dollar actually gained 0.16 on the trade-weighted index, going against expectations that the news from Mr. Trichet and the ECB he leads would sink it further. The greenback was last quoted at 75.74 on the aforementioned index. US Labor Department data showing a larger-than-anticipated drop of 10,000 in weekly initial jobless claims filings helped pressure the metals a bit lower while March sales by US retailers came in below forecast and helped underpin the same.

The European Central Bank moved to combat regional inflation via its first interest rate hike since 2008. Albeit the quarter-point lift was largely anticipated and baked into many a market price equation, the significance of the fact that the institution moved ahead of the US Fed (a lead it has not taken in some eight years) was not lost on the investing crowd this morning. Moreover, the ECB took this important step at a time when conditions in Europe are not exactly confidence inspiring. Portugal became the third domino to wear the “bailed out” label as it finally began seeking aid from the EU yesterday.

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