Gold Rises for Fourth Day, Silver Declines Slightly

New York gold futures finished higher for a fourth straight day on Thursday, although gains were limited by a rising dollar. Silver and platinum declined slightly as did oil which fell for the first time in three days.

U.S. stocks were mixed. The Dow advanced for its eighth straight gain and toward an 18-month high. The Nasdaq edged slightly above its starting point. The S&P 500 narrowly declined.

New York precious metal figures follow:

• Gold for April delivery rose $3.30, or 0.3 percent, to $1,127.50 an ounce. It ranged from $1,118.20 to $1,128.50.

• Silver for May delivery declined 10.1 cents, or 0.6 percent, to finish at $17.422 an ounce. It ranged from $17.325 to $17.560.

• April platinum fell $4.60, or 0.3 percent, to $1,631.00 an ounce. It ranged from $1,624.70 to $1,638.00.

In PM London bullion, the benchmark gold price was fixed earlier in the North American day to $1,122.75 an ounce, which was an increase of $1.00 from the price on Wednesday. Silver lost 5 cents to $17.490 an ounce. Platinum was settled at $1,633.00 an ounce, declining $3.00.

"Today, you have the U.S. dollar strengthening against other currencies, including the euro," which is usually bearish for gold, Anne-Laure Tremblay, a precious metals analyst with BNP Paribas in London, said on MarketWatch. But "we may see greater interest in gold motivated by its ‘safe haven’ appeal," as a result of fiscal issues in Greece, Tremblay added.

"Mounting concerns that the EU ‘assistance’ package for Greece is crumbling fast depressed the euro-gold-oil trio," wrote Jon Nadler, senior analyst at Kitco Metals, Inc. [Read Nadler’s full commentary.]

"As long as there isn’t a clear resolution of the debt issue in Europe, gold will continue to be supported in the current range," Wang Honggang, a metals analyst at CIFCO Research Institute, said today on Bloomberg. "The performance of the dollar and the euro will drive gold for now."

"Gold did end higher today despite the weak euro/dollar, and that is a very bullish indicator. With worries about sovereign debt, there is still a safe haven to the gold," Mihir Dange, a COMEX gold floor trader in New York, said on Reuters.

Gold, considered a hedge during times of high inflation and economic uncertainty, tends to follow oil and move opposite to the U.S. dollar. A rising greenback makes dollar-denominated commodities, like bullion, more expensive for holders of other world currencies.

Oil and gasoline prices

Oil prices ended lower "as hesitations over European plans to help Greece pressured the euro, lifted the dollar and weighed on commodities," wrote Nick Godt of MarketWatch.

"We think we’ll probably test $84 in the next week or so, and if we can break that, it could really make a substantial move higher, up toward $90," Brad Samples, a commodity analyst for Summit Energy Inc. in Louisville, Kentucky, said on Bloomberg. "If we don’t break the $84 to $85 level, we’ll probably stagnate."

New York crude oil for April delivery ended down 73 cents, or 0.9 percent, to $82.20 a barrel.

The national average for regular unleaded gasoline jumped a penny to $2.799 a gallon, according to AAA fuel data. The current average is 2.3 cents above last week, 18.9 cents more than a month back, and 87.9 cents higher than the average from a year ago.

U.S. Stocks

U.S. stocks were mixed and "seesawed midday Thursday" as "investors welcomed reports that suggest pricing pressure remains mild and that jobless claims fell last week," wrote Alexandra Twin of MarketWatch.

"The market seems to be looking for any type of negative news after the recent stretch we’ve had," Michael Nasto, the senior trader at U.S. Global Investors Inc., which manages about $2.5 billion in San Antonio, said on Bloomberg.

"We were initially up because of the economic news that came out. Then, we drifted lower because of a rumor on discount rates being raised. But, in my view, the fundamentals are still there to lift us higher."

The Dow Jones industrial average climbed 45.50 points, or 0.42 percent, to 10,779.17. The S&P 500 Index retreated 0.38 point, or 0.03 percent, to 1,165.83. The Nasdaq Composite Index advanced 2.19 points, or 0.09 percent, to 2,391.28.

Gold, Silver, and Metals: Prices and Commentary – March 18, 2010

by Jon Nadler, Kitco Metals Inc.

I.M.F. = Instant Money Forthcoming?

Good Day,

Mounting concerns that the EU ‘assistance’ package for Greece is crumbling fast depressed the euro-gold-oil trio early this morning. Concurrently, the US dollar drew new strength from the situation and was able to vault back to above the 80.00 level on the trade-weighted index. Suggestions (mainly of German origin) are now being floated that Greece should knock on the IMF’s door for help. Just how the IMF might help Athens out of the credit swamp remains unclear at the moment. However the time is approaching when someone, somewhere, has to pull a trigger and offer a concrete, workable plan.

Such reflections of the deep split between Greece (in need) and Germany (reluctant to give) and the sizeable distance from any imminent solution to the problem made for a near-total dissipation of the optimism being shown just last week about the state of the crisis. Recall Mr. Prodi’s assurances that the Greek crisis was fully over, in his opinion. Well, we are left with that opinion but facts that are starkly the opposite of it. The euro thus lost some 0.6% and fell against all but two of its 16 rivals this morning.

Gold, which has been fairly closely shadowing the common currency, also ran into a bit of difficulty ahead of the NY market’s opening, as the impasse surrounding Greece roiled markets in the early hours on Thursday. Albeit the overnight trading range was rather narrow ($1118-$1128) the metal appears to have lost at least part of the traction it gained following the gift of continuing freebie dollars aimed at the carry trade, courtesy of the US Fed the other day.

Spot bullion dealings in New York opened with mixed showings this morning. While gold was ahead by $1.20 per ounce and was quoted at $1126.30 on the bid side, silver was down a couple of cents at $17.49 per ounce. Resistance in gold remains overhead at the $1145 area but the metal has thus far had some trouble clearing the $1130.00 mark. ETF holdings remained flat at 1115.5 tonnes for a fifth session.

Meanwhile, last year’s uptake of some 425 tonnes of yellow metal by certain central banks represents the largest such amount that the official sector has added to its collective basements since 1964. Such a shopping spree is not likely to recur in 2010 however, as New York’s CPM Group envisions only between 190 and 220 tonnes of bullion being added to institutional reserves in the next twelve months or so. This, of course, does not take into account possible one-off sales by cash-strapped PIIGS (or others).

As we have oft-repeated here, some will buy, some will sell. It is part of on-going (and internal policy-driven) reserve management. The good news is that heavy (5,950 tonne) dis-hoarding such as seen in the previous nine years, may have run its course. Central banks that wanted to lighten up on their gold stash have largely done so already. This may not necessarily imply that equally heavy re-hoarding is about to occur, however.

London-based RBS analyst Nick Moore opines that near-record gold prices may keep official sector buyers at bay. In his words, "central banks might feel somewhat embarrassed to be buying gold at records. When you have an asset trading at an all0toime high, the temptation is not to purchase more."

Platinum and palladium both fell; the former losing $6 at $1623.00 and the latter showing a $7 decline at $470.00 the ounce. Rhodium remained at $2380.00 per troy ounce, after having fallen $10 on Wednesday. These indications were all unfolding against a marginally less buoyant US dollar (at 79.99 on the index and at the 1.367 mark vis-a-vis the euro) and a still-falling oil price at $82.21 per barrel.

This morning’s US economic statistics indicated that first-time jobless claims fell by 5,000 positions in the week that ended Friday. The seasonally-adjusted figure now stands at 457,000 but last week’s drop marks the third consecutive week of such declines. The data gave US stock futures as well as the US dollar a bit of a morning lift equivalent to a nice, single-shot of economic espresso.

The economic aforementioned caffeine is not however quite as robust as some would prefer it to be; it turns out that although US leading economic indicators marked their eleventh straight gain in February (with a rise of 0.1%), their arrows continue to point at a sluggish-at-best recovery. Consumers appear to be less inclined to consume, thus making for tenuous conditions on the job growth front. Consumer prices appeared to be about as flat in February as were consumers’ wallets; core CPI rose 0.1% -if one wishes to call that a ‘rise.’

[CoinNews editor: see related article: Consumer Prices Flat in February.]

Finally this morning, a Business Week piece that all but applies sutures to the gaping wound that the Greek credit crisis has engendered over in Europe. The speculation, by PIMCo.’s (the world’s largest bond fund) co-chief investment officer Mohamed El-Erian goes something like this:

"The IMF will come in, but it’s going to be a bumpy road," said El-Erian, co-chief investment officer at Pacific Investment Management Co., in an interview on Bloomberg Radio. "There is no immediate solution. Don’t underestimate the game of chicken between Greece, the EU and the IMF."

The nagging question around here remains: where will the IMF get the dough with which to plaster the cracked Greek amphora? Your guess is as good as ours. It has come to the source of last resort. The IMF was the brainchild of Messrs. Keynes and White with the objective that a stable world monetary order is the sine qua non requirement for global prosperity (and peace, we might add).

A brief quote from the IMF’s mandate should clarify where this Greek thing may be heading…:

"to promote international monetary cooperation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems; [and] … (v.) to give confidence to members by making the general resources of the Fund temporarily available to them under adequate safeguards, thus providing them with opportunity to correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity."

"Maladjustments" and "collaboration" as well as "general resources" – beautiful euphemism, one and all. The IMF is presently unable to meet the "needs" of several emerging markets in Asia, Africa, and South America, let alone those of the G-8. It has had trouble meeting its own balanced balance sheet. Witness the need to let go of 403 tonnes of its gold to plug its budgetary shortfall.

In order to get a loan from the IMF in the first place, a country has to stick to what is called "Structural Adjustment Programs" (another pretty euphemism for "getting thy act together"). Now, Greece has been maligned all sorts of ways and we will not go into details on which allegations ring true or not. However, what Athens faces-should it seek an IMF helping hand- is a long string of painful "to-do’s" including:

Limits on money growth, reformation of its tax code, the removal of tariffs and/or quotas, cutting the government’s size, shrinking the public sector, and reforming public administration. Among other measures that were last practiced by one Mr. Draco, in…ancient Greece, of all places.

Long story, short: you already know how the austerity measures demanded by the EU previously have gone over in Greece. Not very well at all. And now, we have the best/final solution at hand? Wonder what it will bring….

And so the world turns…on these last few days of winter…

Jon Nadler
Senior Analyst

Kitco Metals Inc.
North America 

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