Gold bull may have ended in August 2011

In the Lead: “India Dodging Silver Bullet?”

The midweek trading session in precious metals opened to the downside in New York this morning despite a 0.31% drop in the US dollar on the trade-weighted index and a 0.30% gain in crude oil values. Then again, yesterday, we witnessed the price of gold rising nearly $20 along with gains in the US dollar. Spot gold was down $4 at $1,656.50 while spot silver fell 23 cents to $31.61 the ounce.

In this morning’s annual gold survey presentation, Thomson Reuters GFMS analysts noted that net gold investment demand fell last year. The finding dovetails with the revelations we recently saw in the CPM Group’s similar annual round-up of market facts and figures. CPM had reported a near 6% drop in investment offtake last year. There was good demand for gold bars but on the other hand the 2011 metrics in gold coin sales — at least as reported by the US Mint — are worth translating into a visual, as they show how the retail market chased rising gold prices and then soured significantly in the wake of that which was perceived as a possible top in the yellow metal:

Platinum dropped $7 to the $1,588.00 mark and palladium eased $4 to the $634.00 level. Good news for the PGM complex was noted this morning in the story that Chinese automobile sales rose 4.5% last month, beating analysts’ estimates. The gains were attributed to sales-sensitive dealers expanding discounts to buyers in the wake of record fuel prices. German auto sales also came in quite strong; VW and BMW posted fresh sales records in Q1.

No changes were noted in rhodium at $1,350.00 on the bid-side. Copper did lose another 0.35% however, even as all other base metals eked out small gains ranging from 0.10% to 0.30% this morning. Most of the appreciation in base metals was attributed to the just-received reports of a large quake near Sumatra. The quake, it was said, triggered some initial buying activity in nickel and tin especially, and saw some sympathy buying from the rest of the complex. There are nickel and tin operations in and around the region’s islands.

Nervousness continues to define the markets in the wake of tepid Chinese economic data and last Friday’s US jobs figures. US equity markets suffered another day of losses on Tuesday and the Dow now rests just above the 12,700 level. There is some concern that the string of losing sessions on Wall Street could engender margin calls that might affect precious metals positions among certain investors. For the moment, the Dow futures appeared to be receiving a lift from the reported profits at aluminium giant Alcoa.

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