New York gold futures topped $1,160 an ounce, rising slightly on Thursday despite early profit-taking and a stronger dollar which dampened the appeal of most commodities. Gold typically falls when the greenback rises.
In white metals, silver advanced as well, but platinum and palladium modestly declined.
In other market news, crude oil rose 2 cents, and U.S. stocks ended positive for a sixth straight day.
New York precious metal figures follow:
Gold for June delivery added 70 cents, or 0.1 percent, to $1,160.30 an ounce. It ranged from $1,150.70 to $1,162.30.
Silver for May delivery rose 1.8 cents, or 0.1 percent, to $18.433 an ounce. It ranged from $18.225 to $18.540.
- July platinum fell $7.90, or 0.5 percent, to $1,726.30 an ounce. It ranged from $1,715.30 to $1,738.60.
- June palladium declined $2.10, or 0.4 percent, to $545.90 an ounce. It ranged from $539.20 to $550.00.
In PM London bullion, the benchmark gold price was fixed earlier in the North American day to $1,154.50 an ounce, which a gain of 75 cents as compared to Wednesday. Silver lost 12 cents at $18.270 an ounce. Platinum settled at $1,718.00 an ounce, falling $10.00. Palladium declined as well, retreating $3.00 to $542.00 an ounce.
"Gold can continue to gain because people are still worried about the euro," Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, was cited on Bloomberg. "We have a disconnect between gold and the dollar, and that will continue as long as Greece and the euro zone are still in the news.
"It’s very difficult to make a call on gold today, but some speculators are hedging themselves from currency risk," Andrey Kryuchenkov, an analyst at VTB Capital in London, said on MarketWatch.
"A significant outflow was recorded in silver ETFs yesterday as investors pulled profitable chips off that table and let go of more than 106 tonnes of the white metal- the biggest such outflow since January," wrote Jon Nadler, senior analyst at Kitco Metals, Inc. [Read Nadler’s full commentary.]
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 rose slightly "as buyers returned toward the late part of the session, but steep declines for other key energy products dampened enthusiasm," wrote Claudia Assis and Polya Lesova of MarketWatch.
"The main driver in NYMEX front-month crude’s weakness is
option’s expiration on the May contract," Richard
Ilczyszyn, senior market strategist at Lind-Waldock in
Chicago, said on Reuters. "There’s a lot of open
interest in the $85 and $86 calls and so the market is pinned
at this point and in a holding pattern."
New York crude oil for June delivery rose 2 cents, or 0.02 percent, to $86.75 a barrel.
The national average for regular unleaded gasoline fell one-tenth of a cent to $2.857 a gallon, according to AAA fuel data. The current average is 1.3 cents higher than last week, 6.7 cents more than a month back, and 80.7 cents higher than the average from a year ago.
U.S. stocks climbed "to close a volatile session, as investors took the latest jobless claims report in stride and Google reported much better-than-expected earnings after the closing bell," wrote Julianne Pepitone of CNNMoney.com.
"There’s plenty of fuel out there that could propel stocks higher," Hank Smith, who helps oversee $6 billion as chief investment officer of Haverford Trust Co. in Radnor, Pennsylvania, said on Bloomberg. "Corporate earnings continue to accelerate. That’s adding confidence about the economic recovery."
The Dow Jones industrial average advanced 21.46 points, or 0.19 percent, to 11,144.57. The S&P 500 index climbed 1.02 points, or 0.08 percent, to 1,211.67. The Nasdaq Composite index rose 10.83 points, or 0.43 percent, to 2,515.69.
by Jon Nadler, Kitco Metals Inc.
The US dollar resumed its climb after a couple of wobbly sessions and traders were largely sidelined as they awaited a slew of US economic data today and tomorrow. The euro’s first drop in five trading days 9now at 1.354)–once again motivated by Greek-infused apprehensions- helped the greenback rise a hefty 0.49 on the trade-weighted index, to reach 80.70 at last check. Crude oil eased just a tad, following its breathless, 2.1% sprint on Wednesday.
Fresh figures on weekly jobless claims filings, industrial production, and NAHB housing index are in the pipeline for today, and are giving players an excuse for a couple of extra coffee breaks as they wonder what the stats might show. No need to wonder about China’s economic growth, however. The country reported an 11.9% rate of growth for Q1 and gave plenty of ammo to both commodity optimists as well as to those who see the Chinese economic kettle as boiling over in a cloud of steam.
A significant outflow was recorded in silver ETFs yesterday as investors pulled profitable chips off that table and let go of more than 106 tonnes of the white metal- the biggest such outflow since January. Analysts at Barclays pointed to "silver’s fundamentals remaining weak, [and] should support from positive investment turn negative, prices are susceptible to sizeable corrections."
A bit of a similar, profit-skimming-driven move was observed in one palladium ETF yesterday, following a spectacular, 13%+ gain in the noble metal during the course of this month alone. The Swiss-managed fund of ETF Securities lost about 3.7% of ounces being held as a result of the cashing in of chips by investors.
This morning’s New York trading session opened on the downside for the precious metals. Gold lost about $2.10 on the open, starting the day off with a quote of $1152.70 on the bid-side. Silver fell 12 cents to open at $18.30 the ounce. Platinum and palladium dropped by $13 and $6 respectively, to start at $1715.00 and $541 per ounce this morning. No change was recorded in rhodium –still quoted at $2890.00 on the bid at last check. Support for gold should emerge at near the $1145 level, whilst resistance is still manifest at the $1160+ price levels. Outside news factors will tell the story. The market’s internal fundamentals remain essentially upside-down, despite recent technical and momentum-driven jumps. To wit:
The Financial Times picked up on yesterday’s slew of GFMS-produced annual gold market statistics and found that the London-based consultancy believes that "the current price of gold is unsustainable in the long term and prices will have to fall to stimulate demand in the jewellery sector."
This, as "demand from investors for the yellow metal soared last year, overtaking jewellery demand for the first time since 1980, GFMS said on Wednesday in its annual report on the gold market."
Whilst GMFS sees the persistent nervousness regarding the global economic recovery as still sustaining additional investment demand in the short-term, it also believes that such strong inflows as were seen in the investment niche in 2009 are not likely to be maintained, especially as the landscape shifts towards a campaign of central bank-initiated rising interest rates as they undertake their exit strategies and put an end to the era of liquidity injections that were required to keep the global economic vessel afloat.
"It is difficult to argue that prices could be sustainable" in the long term, he said. "This is a market that has moved out of kilter with its underlying fundamentals." argued GFMS in its report.
Global jewellery production sank 19.8% to a 21-year low last year, and GFMS opined that "prices would need to fall below $900 to revive the fortunes of the jewellery market. At $700 to $800, you’d see really good demand from places like India."
There certainly was no shortage of bullion on the market’s supply side, with record-high prices engendering an explosion in the amounts of metal being recycled. Scrap gold flows reached a staggering 1,674 tonnes in 2009, and they were up by 27% from their 2008 levels. In fact, the flow of scrap was so large during the first quarter of 2009 that-for the first time ever- more bauble were being melted down than actually produced for sale.
More gold flowed into refiners’ furnaces around the world (many of which were being fired 24/7) than was being produced by global mines in the period. How is that for a market ‘out of kilter?’ Mine production, meanwhile, increased by 7 per cent to 2,572 tonnes, undermining the often-heard arguments of ‘peak gold’ being offered by…mining company executives (?!) at various trade shows. "Production is not falling off a cliff as some had predicted.” Mr. Klapwijk said.
Business Week quoted GFMS’ Mr. Klapwijk as also warning that "There is an element of a bubble here and it’s not sustainable over the long run. A return to more normal type conditions in the economy isn’t going to happen in a hurry. At some point in the future there’s got to be a major drop in prices" as governments improve finances."
It was also noted in the GFMS survey that global gold investors warmly welcomed the news last September that a faster-than-expected unwinding of the producers’ hedge books was taking place. GFMS, on the other hand, believes that last year marked the ‘last hurrah’ for de-hedging. This has been echoed by recent analyses from Societe Generale (showing only a little over 240 tonnes left on the hedge books globally), as well as others (such as Fortis Bank Nederland). Mine production cannot explain price strength in 2009 as GFMS estimate this rose notably to the second highest figure ever and that further growth is likely in 2010.
This, then, is what a fundamentally flawed gold market looks like. A market that is currently a complete junkie to speculative investment demand. How close, or how far, the situation is from the diagnosis of an ‘overdose’ remains to yet be seen. Could be two months, just as it could be two years. The point is, the spec fund gold snorting binge has not helped the market’s state of health despite the glowing headlines and mass euphoria it induced. You cannot put a spin on the market’s mainstay, structural components’ figures, try as you might. "Check that pulse" -practitioners of ancient medical techniques would advise.
Kitco Metals Inc.
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