Gold takes early losses after budget agreement

As for the never-ending reports and hard-money newsletter “flash-alerts” that the greenback is about to fall off a cliff or that it is ready for embalming, the Bloomberg reports reveals that, in fact, the US currency “while weakening, remains the world’s reserve currency. The dollar’s share of foreign reserves held steady in 2010, ending at 61.4 percent, according to the International Monetary Fund in Washington. The dollar was involved in 85 percent of currency trades from April 2007 to April 2010, compared with 90 percent in the three years through 2001, data compiled by the Bank for International Settlements in Basel, Switzerland show.”

Silver continued to advance, albeit with much smaller gains than previously on display; it rose 29 cents on the open to a quote of $41.22 the ounce. It recorded another 31-year peak at one penny under $42 earlier on. Veteran market analyst Ned Schmidt continued to suggest that silver – at current levels – remains “a sale candidate.” In the background, crude oil was trading at $111.69 per barrel (off $1.10) and the US dollar was 0.15 higher on the trade-weighted index, quoted at $75.06 at last check.

Elliott Wave analysis issued late on Friday pointed to the fact that [alluding to the back-to-back days of 96% silver bulls] “one would expect sentiment extremes at the outer edge of a vertical price rise as a broad consensus solidifies that believes in even higher prices. Silver is there. There is no wave relationship that we can discuss, but when the trend reversal comes, it will consist of a crash, similar to the behavior of every other reversal after a commodity spike top.”

Also contributing to the aforementioned decline in oil values was the news that the IMF has trimmed its growth forecasts for the US and for Japan while stating that current price tags pose a “new risk to the global economy’s expansion.” The IMF did not, however, alter its overall forecast for global growth even as it cited the potential threat being posed by ultra-high black gold prices. Meanwhile, Commerzbank analysts emphasized that “current prices aren’t justified by the supply-and-demand scenario.” That is also quite the case not just for crude oil, mind you.

Platinum and palladium dropped this morning as mild profit-taking was also manifest in that sector and as automotive world news did not exactly boost further speculative interest in the noble metals. The former was down $12.00 per ounce at the $1,797.00 mark while the latter slipped $2 to open at the $793.00 per ounce bid level. Fresh news continue to indicate that certain Japanese automakers may halt production at various US facilities in order to catch up with logistical issues that have arisen in the wake of last month’s quake. Meanwhile, the China Association of Automobile Manufacturers revealed that March car sales in that country came in below expectations in the wake of the cessation of incentive programs.

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