GFMS, in its recently-published "Platinum & Palladium Survey 2011", is forecasting that platinum will sustain a gross surplus in 2011 of a similar magnitude to that of 2010. Mine production is expected to increase modestly this year, and while GFMS describes the situation in South Africa as "challenging", including risks surrounding this year's wage negotiations, the prospect of a repetition of the major disruptions of 2007 and 2008 is relatively low. The prospect of relatively buoyant prices also underpins increased supply from recycling and GFMS doubts that fabrication demand this year and keep pace with supply, let alone exceed it.

Platinum's underlying fundamentals in 2010 are described as "distinctly lacklustre" and, as above-ground stocks increased for the sixth successive year, the momentum in platinum prices was arguably almost entirely a function of investor activity. GFMS identifies 550,000 ounces of ETF investment in 2010 as well as 76,000 ounces of retail investment (although this latter is taken above the line in the supply-demand balance), but even after this investment activity the market was left in a substantial residual surplus, suggesting that non-investment inventory has grown by over a million ounces in the past ten years. This increase is the equivalent of over two months' fabrication demand and gives the lie to suggestions that the platinum market is light on inventory.

GFMS argues that the central planks of the case in favour of the precious metals sector are still intact and although the PGMs are primarily industrial metals, they have been benefiting from the factors bolstering gold investment. Indeed the case is made that investor sentiment in platinum has become increasingly influenced by the broader investment climate, and investor attitudes to gold in particular, given that one of platinum's drivers, the risk of supply disruptions and/or the economics of mine production has been broadly absent in the past two years, while the market has also been in surplus.

Palladium's price increases, by contrast, have stemmed from a better set of underlying fundamentals, both existing and prospective, with a resultant higher percentage increase in price than platinum over the past two years, and a larger absolute gain in 2010.

The Survey includes its usual in-depth analysis of all the aspects of the metals' markets and their fundamentals; there follows one interesting highlight in the shape of Chinese jewellery.

Chinese jewellery has been one of the key stories of the platinum market over the past decade. After reaching almost 1.7M ounces in 2002, Chinese demand for platinum jewellery fell to 835,000 ounces in 2006, before starting a recovery. In 2009 it was close to the 2002 record at 1.6M ounces, but fell back to 1.2M ounces last year, or 62% of world jewellery demand and 18% of world fabrication demand. This 26% fall, accompanied by a small decline in Europe, while there were marginal increases in North America, meant that, with the exception of the petroleum sector, jewellery was the only end-use where demand contracted in 2010. The increase in North American demand came largely from a recovery at the luxury end of the market, rather than an overall lift.

The Chinese market is price-sensitive and high prices accounted for a good part of last year's fall in the local jewellery sector, but GFMS also points out that the trade held high jewellery stocks at the start of 2010 and so there was little demand for any re-stocking, especially given the high price. (In fact there was little industrial re-stocking anywhere in the platinum using industries last year). The Group does underline the fact, however, that Chinese demand in 2009 was exceptionally high and that Chinese jewellery demand was, in 2010, the second-highest since 2004. Furthermore in metal value terms, demand was roughly level with that of 2009 and given that a good part of 2009 demand came from the trade's re-stocking, actual consumer expenditure was higher in 2010 than in 2009. GFMS produces an in-depth study of the sector and notes, inter alia, that after a rapid expansion in jewellery manufacture capacity towards the end of the past decade, retailers have had to cut margins in order to retain sales in the face of weakening consumer demand; one of the by-products of this has been a switch among manufacturers from PGM to gold and descries this shift to gold as "quite dramatic" in 2010.

Although prices are expected to remain high and volatile in 2011, GFMS believes that robust economic growth and a return to normalisation of inventory replenishment by the trade will result in some modest growth in Chinese platinum jewellery offtake in 2011.

GFMS is suggesting that the strength of the investment environment for the precious metals will again overpower platinum's unprepossessing fundamentals this year and that, despite the likelihood of a further significant gross surplus, prices will remain elevated. A high of $1,925 is suggested, most likely coinciding with a gold move through $1,600; while the downside is constrained to $1,675, a level that GFMS expects would be likely to attract considerable support from the jewellery market tin China, as well as renewed investment inflows.

Source

Read More..

Spot gold surged to the highest on Friday in thin holiday trading, hitting a record for the sixth consecutive session as the dollar weakened and a number of factors ranging from geopolitical fears of inflation uncertainty.

Silver also raced to its loftiest in 31 years, notching the milestone for a seventh straight day and outstripping gold's weekly gains by a huge margin.

The ongoing euro zone sovereign debt crisis, unrest in the Middle East and North Africa, rising global inflation, and most recently worries over the fiscal stability of the United States have fueled the record-breaking rally in these precious metals.

Spot gold rose to an record of $1,512.50 an ounce, before easing to $1,507.69 by 0853 GMT, on track for a weekly gain of 1.5 percent -- its sixth consecutive week of gains.

Spot silver hit $46.69 an ounce, its highest since 1980, on course for a weekly rise of 8.4 percent, its biggest weekly increase in two months.

Silver has gained 51 percent so far this year, and gold 6 percent. This compares with a corresponding 1 percent rise in the London Metal Exchange price of copper, the bellwether of the industrial metals complex.

Supporting precious metals, the dollar was languishing near a three-year low against a basket of currencies, and could take a run at the all-time low hit in 2008, pressured by record low interest rates and the crushing weight of the U.S. budget deficit.

So long as the overall environment stays supportive and the dollar remains weak, gold is expected to retain its strength. Price of bullion is seen to rise to $1,700 an ounce by 2015, analysts polled by Reuters said in a poll. [ID:nLDE73K0TT]

However, a correction might be on the horizon after the recent rapid ascent, traders and analysts said.

"Gold is likely to consolidate around the $1,500-level next week," said Li Ning, an analyst at Shanghai CIFCO Futures. "The angle of the recent rally is very sharp, and we are bound to see some correction in the near term."

MORE STEAM TO RUN ON?

Spot gold has rallied more than $50, or 4 percent, in the past eight sessions. The Relative Strength Index, or RSI, rose to nearly 75, a level unseen since October last year, suggesting the market has been heavily overbought.

The RSI on spot silver climbed close to near 89, its highest
since April 1987.

The gold market may have topped out, and now is the time to
sell while there are still people willing to buy, said Barry Schwartz, vice president and portfolio manager at Toronto-based wealth manager Baskin Financial Services.[ID:nN21263459]

However, Shanghai CIFCO's Li said gold has more steam to run on and expected prices to peak at $1,550 by the end of the second quarter, buoyed by the Middle East unrest, sovereign debt concerns on both sides of the Atlantic and inflation worries.

The Shanghai Gold Exchange has started a trial for over-the-counter trading, providing a convenient tool for institutional clients to trade large quantities of gold, to catch up with exploding investment demand in China.
[ID:nL3E7FM00C]

Holdings in the physically backed exchange-traded precious metals funds dipped ahead of the long Easter weekend. SPDR Gold Trust , the world's biggest gold ETF, saw holdings dip 0.6 tonnes to 1,229.643 tonnes.

Financial markets in Singapore and Hong Kong are closed on Friday for a public holiday, and Hong Kong will remain closed on Monday.

Precious metals prices 0853 GMT 
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1507.69    4.95   +0.33      6.22
  Spot Silver        46.62    0.06   +0.13     51.07
  Spot Platinum    1822.49   11.69   +0.65      3.11
  Spot Palladium    763.00   -2.48   -0.32     -4.57
  TOCOM Gold       3984.00    2.00   +0.05      6.84          622
  TOCOM Platinum   4840.00   12.00   +0.25      3.07          355
  TOCOM Silver      122.40   -0.50   -0.41     51.11          151
  TOCOM Palladium  2026.00   -3.00   -0.15     -3.39           6
  COMEX GOLD JUN1  1503.80    4.90   +0.33      5.80       112875
  COMEX SILVER MAY1  46.06    1.60   +3.59     48.87       134963
  Euro/Dollar       1.4565
  Dollar/Yen         81.93

TOCOM prices in yen per gram. Spot prices in $ per ounce.
COMEX gold and silver contracts show the most active months

Source

Read More..

Gold surged to record highs on Friday after the dollar fell to its lowest point since late 2009 against major currencies, along with silver on the highest position in 31 years, while inflation pressures in China also helped lift bullion's appeal.

China's turbo-charged growth eased just a touch in the first quarter, while its inflation jumped to a 32-month high, putting pressure on the government to do more to rein in prices and keep the economy on an even keel. [ID:nL3E7FF0AC]

Spot gold was steady at $1,472.50 ounce by 0824 GMT, having hit a record high of $1,479.01 an ounce.

Gold is still far below its all-time inflation-adjusted high, estimated at more than $2,000 an ounce set in 1980 as a result of heightened geopolitical pressure and hyper inflation.

"We see gold peaking at $1,500 an ounce. We think there could be some more upside in gold in the short term, especially in this environment of high inflation and rising oil prices," said" Natalie Robertson, commodities strategist at ANZ.

"There is a lot more upside," said Robertson, adding that the peak of $1,500 would be reached by the end of 2011.

Dealers said worries about inflation had spurred steady physical demand from China, where the government has vowed to use all tools at its disposal, including bank reserve requirements, interest rates and the yuan's exchange rate, to wrestle inflation under control. [ID:nL3E7FD1LJ]

Gold's rise to a record only attracted light selling from Thailand and Indonesia, suggesting that investors remained bullish on the outlook. Premiums for gold bars were steady at between 70 cents and $1 an ounce in Singapore.

"Generally, higher consumer prices could still be a boost for gold. Going forward, we will be looking at inflation figures from the United States, and if we see an upside surprise, gold can even go higher," said a dealer in Singapore.

"If you look at recent price action when China announces interest rate hikes, it hasn't affected commodities that much. Also, because of the fact that gold prices are already so expensive, investors are looking at silver as a store of value."

Spot silver rose as high as $42.41 an ounce, its strongest since 1980, with physical dealers in Singapore also reporting buying from speculators.

IShares Silver Trust said its holdings edged up to 10,974.26 tonnes by April 14 from 10,969.71 tonnes on April 13. The holdings hit a record of 11,242.89 tonnes hit on April 8.

The dollar dropped to its lowest in more than a year, under pressure from expectations the U.S. Federal Reserve will not cut short its $600 billion debt-buying programme despite the recent surge in oil prices. [ID:nN14167673]

U.S. consumer price inflation numbers due at 1230 GMT will be closely watched for signs inflation may be rising faster than the Fed may expect.

U.S. gold futures for June rose as high as $1,480.5 an ounce, a lifetime high.

The Singapore Mercantile Exchange (SMX) started trading cash-settled gold futures on Friday, with the contract for June delivery opening at $1,475 an ounce on low volumes.
[ID:nL3E7FF03J]

"They need sufficient liquidity before people start looking at the contracts," said the Singapore-based dealer.

"It's always difficult to get people to adopt a new contract. You'd always stick to traditional, old benchmarks, such as COMEX gold."

Brent crude held steady above $122 a barrel on Friday after China's economic growth beat forecasts despite government efforts to cool expansion and put the brakes on inflation.

Precious metals prices 0824 GMT

Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1472.50   -0.40   -0.03      3.74
  Spot Silver        41.89   -0.19   -0.45     35.74
  Spot Platinum    1785.00   -1.49   -0.08      0.99
  Spot Palladium    767.97    7.34   +0.96     -3.94
  TOCOM Gold       3943.00  -19.00   -0.48      5.74         2430
  TOCOM Platinum   4808.00  -22.00   -0.46      2.39          361
  TOCOM Silver      111.90   -1.50   -1.32     38.15          175
  TOCOM Palladium  2060.00  -13.00   -0.63     -1.76           40
  COMEX GOLD JUN1  1473.60    1.20   +0.08      3.67        21682
  COMEX SILVER MAY1  41.92    0.25   +0.60     35.47        16768
  Euro/Dollar       1.4457
  Dollar/Yen         83.08

TOCOM prices in yen per gram. Spot prices in $ per ounce.
COMEX gold and silver contracts show the most active months

Source

Read More..

Gold and silver futures made ​​history on Wednesday, with the highest value due to the position of the investors collectively take a safe position on precious metals, in addition to the weakening U.S. dollar will worsen the condition.

Gold notched a settlement and an intraday record high and set its sights on $1,500 an ounce. Silver stopped just pennies short of the psychologically important $40-an-ounce level, hitting a 31-year high on its way.

Gold for June delivery (GCM11 1,457, -1.40, -0.10%) rose $6, or 0.4%, to settle at $1,458.50 an ounce on the Comex division of the New York Mercantile Exchange.

The contract climbed as high as $1,463.70 an ounce earlier, according to a preliminary tally available at the CME Group’s website. CME owns and operates Comex.

The settlement and the intraday nominal records supplanted the previous milestones reached just the previous day.

“The geopolitical situation is going from bad to worse,” said Afshin Nabavi, head of trading at MKS Finance in Geneva. “Everybody is talking about gold at $1,500 [an ounce].

As soon as gold breached through the $1,450-$1,450 mark, fresh money came in as some investors scrambled to be part of the rally, Nabavi added.

Gold at $1,500 is certainly possible in the short term, although a more orderly, slower rise over the next month or two would be more desirable, he said.

The metal hit a record of $875 an ounce in January 1980 — the equivalent of $2,350 an ounce in today’s dollars.

In addition to ongoing fighting in Libya, where rebel forces and government forces continue to vie for the upper hand in a NATO-led military intervention, Europe’s debt crisis came back to the fore this week as Portugal appeared to get closer to asking for a bailout.

“Prices are likely to remain buoyant as risk aversion increased on the back of Moody’s downgrade of Portugal’s credit rating,” analysts at ICICI Bank wrote to clients. Moody’s Investors Service cut Portugal’s rating by one notch to Baa1 from A3 on Tuesday, saying a bailout for Portugal seemed very likely.

The focus on Portugal intensified as the country had to pay hefty yields to sell short-term bonds on Wednesday. Investors are concerned that a rescue for Portugal will also rock Spain, an economy bigger than Portugal, Ireland and Greece combined.

Portugal’s finance minister said his country will need a bailout from the European Union, according to media reports Wednesday. Finance Minister Fernando Teixeira dos Santos reportedly told the Jornal de Negocios that Portugal will need to “resort to the financing mechanisms available within the European framework.”

A finance-ministry spokeswoman confirmed the comments, according to Reuters. European Union officials, however, have yet to receive a formal bailout request from Portugal, according to The Wall Street Journal’s online edition.

Meanwhile, silver for May delivery (SIK11 3,940, +0.80, +0.02%) rose 20 cents, or 0.5%, to $39.39 an ounce — the latest in a string of 31-year highs for the metal.

Investors kept their sights on silver at $40, and some believe it would be only a short time from that to the nominal record above $50 an ounce that spot silver hit in January 1980.

The broader suite of metals were mostly stronger, with copper for May delivery (HGK11 435.70, -1.30, -0.30%) rallying 11 cents, or 2.5%, to $4.37 a pound as miner bellwether Rio Tinto PLC (RIO 72.80, -0.17, -0.23%) predicted an even tighter market for copper than most analysts expected.

Palladium and platinum diverged, however. June palladium (PAM11 787.05, +2.45, +0.31%) declined $8.50, or 1.1%, to settle at $784.60 an ounce. July platinum (PLN11 1,797, -1.30, -0.07%) added $1, or 0.1%, to $1,797.80 an ounce.

Source

Read More..

Gold rose to within a whisker of its all-time high on Wednesday, as record low U.S. new home sales stirred talk of extended central banks' accommodative policies, and a possible collapse of Portugal's government rekindled euro zone debt worries.

Bullion rose 0.7 percent to $1,439.76 per ounce, just short of its record $1,444.40 set on March 7, rebounding over 4 percent in the last eight sessions amid safe-haven buying and ongoing Western air strikes on Libya.

"Gold rose on a culmination of further concerns about the European debt issue, coupled with the situation in Libya and very strong crude prices," said Brian Hicks, portfolio manager of U.S. Global Investors' Global Resources Fund (PSPFX.O) with about $1 billion assets under management.

Rising U.S. crude futures also stoke inflation worries on heightened political unrest in the Middle East and North Africa. Yemen's president offered to step down by year end to appease mounting demands for his resignation.

Spot gold rose 0.7 percent to $1,439.60 an ounce by 3:29 p.m. EDT (7:29 p.m. GMT).

Gold accelerated gains to hit a session high of $1,440.90, its highest since March 7, after data showed the U.S. housing market slide was deepening as new home prices fell to their weakest since 2003.

U.S. April futures settled up 0.7 percent at $1,438 an ounce. While commodity markets were mostly quiet on Wednesday, COMEX gold was one of the most actively trading markets with volume approaching 140,000 contracts.

Portfolio managers, including Hicks, said that disappointing new home sales data could lead to an extension of the Fed's $600 billion bond buying program -- dubbed QE2 because it is the second round of quantitative easing -- before it is scheduled to end in June.

"The new home sales data inspired some to think that we may not see the demise of QE2, and we are going to see money printing continue past its potential expiration at the end of June," said Mark Luschini, chief investment strategist of broker-dealer Janney Montgomery Scott with $53 billion assets under management.

"That would likely mean more stimuli and more prospect for inflation, and that's gold friendly," Luschini said.

Spot silver soared to a 31-year peak of $37.34 an ounce, surpassing its previous high set two weeks ago. It later gained 2.6 percent to $37.30 an ounce.

Year to date, silver has gained over 20 percent, and gold was up just over 1 percent. Silver was boosted by near-term supply tightness and strong industrial demand on expectations the global economy continued to recover.

FED POLICY IN FOCUS

A senior official at the U.S. Federal Reserve said the Fed must be "extremely wary" not to let price pressures take hold in the U.S. as they seem to be doing in parts of Europe.

Dallas Fed President Richard Fisher's comments highlight divisions at the U.S. central bank as its bond-buying plan is about to expire.

Gold was also bolstered by the expectation Portugal's parliament would reject the government's latest austerity measures, and that rekindled euro zone debt worries ahead of a summit of the economic bloc.

Despite gold's rally this week, the implied volatility of gold options eased to about 14 percent after it surged above 17 percent in the previous week.

Both platinum and palladium, mainly used as autocatalysts in vehicles, have come under pressure since Japan's March 11 earthquake and tsunami shut car factories in Japan.

Toyota Motor Co (7203.T) said on Wednesday it would delay the launch in Japan of two new additions to the Prius line-up, while Honda Motor Co (7267.T) on Tuesday suspended production in Japan at least until March 27.

Platinum climbed 1.4 percent to $1,756.33 an ounce and palladium gained 2 percent to $747.50.

Prices at 3:29 p.m. EDT (7:29 p.m. GMT)

Source

Read More..

Platinum and palladium stocks started to bite again, according to RBCCM. At the PGM cherry as prices are likely to continue to rise and many current valuations look compelling.

Analysts at RBC Capital Markets believe that the current sell-off in platinum stocks – about 10% over the past week alone – offers a “second bite at the cherry with two of the ‘juiciest’ cherries looking like Aquarius Platinum and North American Palladium at present”.

RBCCM says the issues driving the sell-off “are essentially related to a belief that world economic growth is again taking a beating with rising sovereign risk in Europe and ongoing political instability in the Middle East having an unnerving impact on the price of oil and just to top it off, a large earthquake in Japan”.

RBCCM believes that this “offers an opportunity to become invested for two reasons. The first is simply that the cost base in the South African PGM (platinum group metal) industry is still escalating at rates that will require higher metal prices even if we were facing a flat demand profile. The second relates to very low valuation multiples on some of the stocks in the space – even at current metal prices flat forward”.

The second half of 2010 “delivered a sizeable increase in output”; with rising metal prices, RBCCM finds that “we now have less of the industry making negative cash flows (only about 10% versus over 25% before)”.

As much as this is a “good story”, however, says RMCCM, “one must also take note that almost half of the industry would have been making negative cash flows if the metal price basket” did not improve during the second half of 2010″. Such cash flows referred to are those expressed as including capital expenditure, increasingly known as “free cash flow”.

If the industry cost is increased hypothetically by 10% a year (seen as “easily achievable”, given power cost escalation of 25% a year and labour cost escalation at 10% a year), “a significant portion of production” will be under pressure unless the metal price increases again.

Given flat metal prices, according to RBCCM, “at least a third, but possibly as much as half of the industry, will be right back into making losses”. Again, this is on a free cash flow basis.

A “quick scan” by RBCCM “delivers a clear preference for investment into Aquarius Platinum, and North American Palladium. Beyond these, RBCCM also sees “decent value” in Lonmin, and Stillwater, while on the smaller scale, in Sylvania Resources, Anooraq, Platmin, Jubilee Platinum, and Platinum Australia.

The stocks mentioned operate in South Africa, with the exception of NA Palladium and Stillwater, which are North American. Investment risks across these companies are varied, says RBCCM with the lowest risk likely attributable to North American Palladium and Stillwater, followed by Lonmin and Aquarius with the juniors all of higher risk on average, “given the usual development problems and capital needs associated with growing juniors”.

Selected platinum stocks

	Stock	From	From	Value
Tier I platinum	price	high*	low*	USD bn
Anglo Platinum	ZAR 660.50	-20.5%	9.4%	25.218
Impala Platinum	ZAR 192.62	-20.9%	13.3%	17.638
Lonmin	GBP 16.97	-20.6%	26.3%	5.539
Averages/total		-20.7%	16.3%	48.395
Weighted averages		-20.7%	12.5%
Diversified
Anglo American	GBP 31.10	-10.4%	39.6%	67.354
Mvela Resources	ZAR 35.00	-15.9%	20.8%	1.100
Norilsk	USD 24.33	-8.6%	75.3%	46.380
Camec	Now at ENRC
ARM	ZAR 203.74	-13.7%	39.3%	6.281
Xstrata	GBP 13.67	-13.4%	64.2%	65.369
Averages/total		-12.1%	43.8%	121.115
Weighted averages		-9.9%	51.2%
Tier II platinum
Stillwater	USD 21.51	-16.9%	104.5%	2.198
Aquarius	GBP 3.40	-30.6%	60.8%	2.541
Northam	ZAR 42.00	-22.9%	7.1%	2.199
NA Palladium	CAD 6.08	-23.2%	98.7%	1.014
Zimplats	AUD 13.00	-22.3%	36.8%	1.411
Eastplats	CAD 1.40	-29.3%	62.8%	1.271
Anooraq	CAD 1.06	-41.1%	20.5%	0.220
Royal Bafokeng Platinum	ZAR 60.93	-14.2%	1.2%	1.449
Averages/total		-28.7%	56.1%	10.854
Weighted averages		-32.8%	25.6%
* 12-month

Source: market data; table compiled by Barry Sergeant

Source

Read More..

Gold and silver on the Comex division of the New York Mercantile Exchange underwent a noteworthy correction on Thursday as the dollar strengthened, oil prices dropped and fund managers saw an opportunity to book profits.

Silver posted the biggest loss with the May contract recently off $1.167, or about 3 percent, at $34.88 an ounce in New York. On Tuesday, the grey metal touched a 31-year high of $36.55.

Meanwhile, gold futures for April delivery were down $22.50, or 1.6 percent, at $1,407.10 an ounce. Trade has ranged from $1,403 to $1,431.80.

"The metals have looked a little frothy, particularly silver. Today's sell-off is dollar oriented mostly," said Sterling Smith, an analyst with Country Hedging, who added the European currency chart is looking a little nervous due to the re-emergence of sovereign-debt worries.

The euro fell about 1 percent to 1.3788 against the dollar after Moody's downgraded Spain's credit rating to Aa2 from Aa1 and warned that additional cuts could be forthcoming. On Monday, the rating agency slashed Greece credit by three notches.

Standard Bank said in a note that the debt crisis in eurozone peripherals is moving more into the focus of market players again.

"Even so, a rate hike by the ECB in April is virtually certain although the debt crisis is rekindling. Rising interest rates will lead to higher opportunity costs for holding gold and therefore make gold less attractive for investors," the bank analysts said.

Falling crude oil prices also placed some downward pressure on the precious metals complex. Light sweet crude (WTI) oil futures on the Nymex were recently down $2.54, or about 2.5 percent, at $101.84 per barrel.

While the chaotic situation in Libya is far from resolved, the energy markets on Thursday reacted to news that China recorded an unexpected trade deficit of $7.3 billion in February - its highest in seven years.

Also of note, silver's big loss on Thursday means that the gold/silver ratio has moved to the more manageable number of 40.3:1 from 39:1 on Tuesday.

"Silver had overheated by a large amount and the gold/silver ratio had gotten out-of-whack. Although, we're still going to have to take that ratio back to 43.5-44:1 to get the precious metals back healthy again," Smith said.

"Silver is a very polarized market. We saw silver run up excessively and now we're seeing it sell-off a little bit excessively as well," Smith said.

As for the other precious metals, platinum for April delivery was down $39.60 at $1,762.40 an ounce, while the June palladium contract fell by $15.10 to $766.55 an ounce.

Source

Read More..

Bullion prices bottomed before settling higher in Wednesday early afternoon business, falling following positive US jobs data before dip buying emerged, although the complex remains under pressure after reports emerged that President Chavez of Venezuela was attempting to broker a peace deal in Libya.

- Spot gold struck an intraday low of $1,417.60 per ounce, retreating further from the record of $1,440.40 struck yesterday before bouncing. It was last at $1,425.65/1,426.45 per ounce, down $7.50. On the charts, having broken support at the seven-day moving average of $1,418, next levels stand at $1,417 and $1,408. Resistance is capped at $1,438, $1,440 and $1,442.

- US data showed 368,000 new unemployment claims last week, below an expected 394,000 and down from 388,000 in the previous week - this itself was reduced from 391,000. Revised non-farm productivity for the fourth quarter grew 2.6 percent, as forecast and matching the previous three-month period. Earlier the European Central Bank decided to keep interest rates on hold at one percent, despite growing inflationary fears there.

- The euro punched further gains against the dollar and rose to a new high since November 9 at 1.3969. It was last seen at 1.3943, up more than three quarters of a cent. European equities remained upbeat, rising 1.2-1.3 percent, while US futures were also pointing higher ahead of the New York opening bell.

- Among other precious metals, silver stooped to an intraday low of $34.16 per ounce before recovering to trade at $34.55/34.60, down six cents. Platinum and palladium were indicated at $1,837/1,842 and $816/821 per ounce respectively, down $9 and $2.

Source

Read More..

Gold rose above $1,390 an ounce on Friday, notching its best weekly performance since December, underpinned by fears over a European debt crisis, rising inflation and growing unrest in the Middle East.

Bullion’s gains sparked strong investment buying in silver, which soared to 31-year high, further widening silver’s gains over gold and sending the gold-silver ratio to its lowest level in 13 years.

“There is a big concern over the weekend that we can see some problems with the EU sovereign debt, in particular there are worries that Portugal may need a bailout very soon. Gold as a safe haven is certainly back in focus,” said Bill O’Neill, partner of commodities firm LOGIC Advisors.

The yield on five-year Portuguese government bonds hit a fresh euro lifetime high on Friday, after a euro zone source told Reuters the bloc is increasingly concerned about Portugal’s fiscal conditions and believed Lisbon will need to seek a bailout by April.

Gold also benefits as a safe haven as worries about the political stability of the region have flared this week, with unrest spreading after protests in Tunisia and Egypt unseated leaders there.

Spot gold rose 0.3 percent to $1,386.75 by 2:34 p.m. EST, having earlier hit a five-week high of $1,391.75. Bullion has risen in the five straight sessions, the longest streak since September. It gained almost 3 percent for the week.

U.S. gold futures for April delivery settled up $3.50 at $1,388.60 an ounce, with volume about 50 percent below its 30-day norm. That was in line with recent lower-than-normal turnover, a possible sign of dwindling trading interest.

Silver gained 2.1 percent to $32.42 after hitting a high of $32.86, its strongest level since 1980.

The gold/silver ratio — the number of ounces of silver needed to buy an ounce of gold — dropped to its lowest in 13 years at under 43 on Friday, Reuters data showed, as silver prices outperformed.

Silver’s rise was driven by short-term speculation and buying related to option hedging strategies, as the backdrop of an improving economy lifted the industrial metal, analysts said.

Investment demand for the largest silver-backed exchange-traded fund iShares Silver Trust has also shown signs of stabilizing after hefty outflows last month.

Barclays Capital said in a note it expects silver to continue to outperform gold, with silver trading as high as $37 an ounce.

CHINA’S TIGHTENING IGNORED

Gold initially pared gains after China said it was raising lenders’ reserve requirements by 50 basis points but remained firmly underpinned by investment interest in precious metals.

“The hike in Chinese reserve requirements has clearly taken a back seat as the investor focus has been on developments in the Middle East, especially Bahrain,” said Pradeep Unni, senior analyst at Richcomm Global Services in Dubai.

Simmering tensions across the Arab are supporting gold, as thousands in Bahrain took to the streets on Friday and funerals were expected in two Libyan towns as both countries mourned victims of government crackdowns on protesters. Anti-government protests were also reported in Yemen.

Gold buying spiked this week after data showed U.S. core consumer prices rose 0.2 percent in January, the fastest pace in more than a year, indicating a long period of slowing inflation had run its course. Earlier this week, strong Chinese core inflation had also boosted gold.

The technical picture has also sharply improved this week, with prices breaching key resistance levels, including bullion’s 50-day and 100-day moving averages, analysts said.

Platinum dropped 0.5 percent to $1,832.99 an ounce, while palladium gained 0.8 percent to $847.72, having earlier touched a 10-year high at $855.47.

Prices at 2:21 p.m. EST

LAST/ NET PCT YTD

CLOSE CHG CHG CHG US gold 1388.60 3.50 0.3% -2.3% US silver 32.296 0.726 0.0% 4.4% US platinum 1843.30 -0.70 0.0% 3.7% US palladium 857.70 14.70 1.7% 6.8%

Gold 1387.80 4.50 0.3% -2.2% Silver 32.41 0.67 2.1% 5.0% Platinum 1832.24 -10.50 -0.6% 3.6% Palladium 846.72 5.75 0.7% 5.9%

Gold Fix 1383.50 -2.00 -0.1% -1.9% Silver Fix 31.94 133.00 4.3% 4.3% Platinum Fix 1836.00 3.00 0.2% 6.1% Palladium Fix 847.00 4.00 0.5% 7.1%

Source

Read More..

Oil prices moved modestly higher in European session as an EU/ECB/IMF bailout for Ireland may help ease risks of contagion to peripheral countries. Currently trading at 82.82, the front-month contract for WTI crude oil rose after recording 2 consecutive weekly losses. Fuel prices also climbed as weakness in USD drove demand for commodities. Precious metals traded within narrow ranges with a positive tone. Both silver and palladium gained more than +1%, outperforming slow crawls of gold and platinum.

The program to fund Ireland would be financed from the European financial stabilization mechanism (EFSM) and the European financial stability facility (EFSF). It would also possibly be supplemented by bilateral loans to be negotiated by EU Member States with the UK and Sweden standing ready to consider a bilateral loan. The IMF also said it 'stands ready to join this effort, including through a multi-year loan'.

Market confidence has been boosted today but some investors, including us, worried that sovereign crisis in peripheral European economies will not be resolved after the rescue plan. The next country in focus is Portugal. Although the EU denied that Portugal may need to tap external funds as does not have the same size of problems in the banking sector as Ireland. However, the problem in Portugal is slow growth and high deficits. More importantly, if Portugal is unable to regain market confidence, it will eventually have the same fate and Ireland and Greece.

Societe Generale said palladium, gold and silver will extend their rallies in 2011 and precious metals will outperform agricultural products. The investment bank forecasts gold price will rise to 1500 to 1600 in 2011 while silver and palladium will rise 19% and 21% respectively.

We are also bullish on precious metals and believe palladium will be the best performer in the complex. As we mentioned in the weekly report, Johnson Matthey estimates palladium demand will jump +12.26% y/y in 2010, following contraction of around -8% over the past 2 years. Although supply will increase for the first time in 3 years, surplus will only be around 45K oz, the small level since 2000. Potential supply shortage supply in Russia may result to significant palladium deficit in 2011. We find ourselves more optimistic on palladium's outlook than Johnson Matthey, especially on Chinese demand. In the interim report, Johnson Matthey said that 'the demand outlook for palladium is so strongly weighted towards Chinese economic and industrial growth that any softening of that growth could reduce demand, moving the market closer to balance'. While we agree that acceleration in China's tightening measures to curb inflation and asset bubbles will slow demand for palladium, rise in living standards will increase domestic demand for vehicles. Moreover, new emission regulations will also stimulate uses of palladium as autocatalysts.


source

Read More..