Gold, Silver, Metal Prices: Commentary – 12/23/2009

by Jon Nadler, Kitco Metals Inc. on December 23, 2009 · 0 comments

Bullion update ... Slim Pickings – Just The Facts

Good Day,

Following yesterday’s drop to seven-week lows near $1073, gold prices steadied a bit overnight as mild bargain hunting emerged on the back of the renewed decline. As for the midweek session, well, New York spot bullion trading opened on the indecisive side, with gold showing a $.20 gain, quoted at $1083.40 per ounce against a slightly lower US dollar on the trade-weighted index, (last seen at 78.16, off by 0.15).

One would have expected that even a slight fall-off in the greenback would result in a more robust performance by gold, but conditions are of the pre-holiday variety at this time…thus, do not try to make sense of less than logical moves today, or next week.

Otherwise, pretty slim pickings were also on offer on the economic calendar, with the only news of import being the meager rise in US consumer spending last month (up by 0.5%) and the 0.3% gain in wages and salaries (that, however, was the largest gain since April). Inflation remained about as visible as Waldo normally is, in a poster-sized drawing. We could only spot his shawl.

Crude oil was marginally lower, quoted at $72.73 per barrel, down by $0.89. Silver prices showed a four cent gain, to open at $16.99 per ounce, while platinum added $3 to start the day at $1397 per ounce, and palladium rose by $1 to $354 amid the aforementioned thin trading conditions. Rhodium was unchanged at $2340 per Troy ounce. While automaker SAAB’s fate remains in limbo, that of Volvo has now become pretty clear. It will be sold by Ford, to…China’s Geely. The musical chairs game in the auto industry continues without interruptions. Now, if sales can just pick up, no matter what the nameplate eventually spells…

Earlier, gold prices showed little in the way of change in Europe, but the EUR/USD pair remained near 1.425, and gold’s technical charts "remained weak following a break of an August-December uptrend-support" said Matthias Detremmerie, founder of Thus, the most probable range for gold to finish out the year in, would be the $1050-$1100 channel.

The current correction however could drag prices to levels anywhere between $1030 and $1060 if selling patterns re-emerge. Gold holdings in the exchange-traded funds fell by 2.84 tonnes on Tuesday, following quite decent back-to-back additions in previous days (more year-end book-squaring).The Kitco counters currently show gold sporting a 20% gain on the year-on-year (date-to-date-based) chart and also indicate a 6.8% loss on the 30-day basis.

That said, "The correlation between gold and the single currency pair remains significant, with the latter exposing an oversold reading of around 20 on the 14-day relative strength indicator, which may open for some recovery and which would support gold as well, and perhaps we could re-test the $1,100 level ahead of the New-Year"

Mr. Detremmerie also added that "Liquidity has been thin overnight in Asia, given Japan is closed today for a public Holiday, which equally removed some rebound. Liquidity issues are likely to get worse from here on, as many precious metals traders around the world are exiting their desks for the Christmas and New-Year Holidays."

 In so many words, wade into these holiday-flavored market waters at your own peril, as exaggerated moves could make for less than a joyous occasion (whether you are long or short) at any given moment, on any given day, or abbreviated trading day. We would go as far to say that none of the moves in the metals in upcoming sessions are to be counted as ‘significant’ in either direction and that the market cannot be expected to show discernable tendencies until the in-earnest resumption of trading activities, come January 4th.
This is all we can offer you today, as it is time to catch a plane and get out of the ice and snow for a few days…

Jon Nadler
Senior Analyst

Kitco Metals Inc.
North America 

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For the latest news on American Eagle availability, read 2010 Eagle Bullion Coins on Sale Jan. 19.

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