Gold holding steady on debt nervousness

In the Lead: “Mind the Gap(s)”

Tuesday morning trading in precious metals got underway while participants were still on active watch for any news from “Stalemate Central” in Washington DC. The trading tilt was towards lower values at the start of the daily session but the complex did not give too much up as debt-related nervousness kept bids relatively robust.

Options expire today and added/related volatility will likely be on tap for the rest of the market day. Spot gold opened at $1610.90 per ounce with a loss of $3.90 despite the notably softer US dollar (down 0.49 on the index at 73.65) and despite crude trading within 50 cents of the century mark per barrel.

Silver slipped by 4 pennies to start the session off at $40.32 per ounce on the bid-side. The white metal showed a remarkably narrow overnight trading range of a little more than half a dollar. Both gold and silver appear slightly tired of the off-again/off-again US debt soap opera but most of the traders we polled dismiss the possibility of the US defaulting next Tuesday. One New York-based market observer offered the take that, in the event of successful and deep cuts in US spending, the economy could contract sufficiently to make current silver prices history, so to speak…

Over in the noble metals’ group platinum fell $3 to open at $1,783.00 while palladium climbed by the same amount to start at $808.00 per ounce. In the currency markets the euro hovered above the $1.445 mark even as Moody’s offered the prospect of a “virtually 100% chance” of a Greek default and the Swiss franc continued to shine as warmly as gold has of late. Gold’s near-vertical trajectory and performance has however been eclipsed by…you guessed it; golden-delicious, Apple stock. Charts show a wide gap developing between the two assets as Apple is doing the exact opposite of what Mr. Newton had experienced one fine day under a tree.

Carmaker Ford is expected to announce its ninth consecutive quarter of profitable operations, albeit the tally might reveal a 7% to 8% decline in earnings. No change was seen in rhodium which was still quoted at $1,900 on the bid-side. Dow futures showed a potential rebound in the making as traders awaited a string of earnings reports (3M, Ford Motor, UPS, etc.), the Case-Shiller new home sales tally, and the reading of the Conference Board’s Consumer Confidence levels.

The US new home sales data showed a decline of 1% last month (to an annualized level of 312,000 units) however median sales prices gained ground by 5.8% and touched the $235,000 mark. The market shows a half-year supply of available homes at current sales levels, and there is some hope that the gap in supply/demand might narrow further down the road. US consumer confidence metrics also showed improvement for the current month and while the sentiment among those polled still indicates various persistent apprehensions about the future, more Americans expect job creation and incomes to pick up as we roll into 2012. But, for now, back to current reality (more like a…reality show, really).

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