A sixth day of losses in values was in the making for gold as the US dollar took a sizeable leap against the euro and as oil prices eased further. The greenback's largest gain in three weeks against the euro came on the heels of an unexpectedly weak reading on the economy in Germany and following a fresh round of 'excessive volatility' comments as regards the dollar/euro situation, by the EU's Jean-Claude Juncker. The fact that Credit Suisse swung to a loss and tossed out another $5 billion in credit related losses did not manage to budge gold as it was struggling to maintain the $900 level. A fresh overnight dip to $895.70 was thus far seen as a successful test of near-term support, but as oil approaches $117 and the dollar index 72.25 the market could be in for a visit to the $885 level before too long.
Participants may have been paying more attention to the fact that Barclays managed a profit and diverged from the banking sector's common syndrome of large writedowns these days. The easing in crude oil from levels that were thought of as excessive even by the latest of buyers, helped cool some of the omnipresent inflation apprehensions. Gold investors are also beginning to see several pivot points taking shape in currencies, the credit crisis, and the official sector's (thus far only verbal) commitment to stability, and they are lightening up on metals positions as a result.
New York spot gold opened with a modest $0.40 gain at $904.00 per ounce, as the trade awaited US economic figures to provide the catalyst for the day's action (if any) on the buy side of the speculative equation. The underlying tone has already been set by the dollar & oil combo and is still pointing southward as the metal trades very near three-week lows. Silver was unchanged at $17.01 while the noble metals continued somewhat lower, with platinum losing $2 at $1999 and palladium dropping $6 at $441 per ounce respectively.
Yesterday's announcement by Japan's Mitsui Mining & Smelting Co. that it plans to introduce a diesel catalyst which has successfully substituted platinum with silver has knocked some of the wind out of platinum's sails, despite the continuing deficit scenario taking shape in the metal. There is hardly any surprise in the fact that users of very expensive metals are scrambling to find replacements for the same. Evidently, some are succeeding in their quest.
The gold ETF lost another 2% if its holdings and is threatening to break under the 600 tonne figure, if current price decline patterns continue. Some support for gold could however emerge from good old India, as the country is gearing up for the festival of Akshaya Tritiya on the 7th of next month. Sidelined buyers who believe gold could be picked up for around $870 or so per ounce would be eager to make some purchases for that auspicious date.
Amateur market observers who have lately proclaimed that investment is the only important price supportive and/or defining component in gold, and that jewelry no longer matters, may welcome such buyers with open arms. Anything to avoid a fall to the 1980 high of $845 is now seen as practically vital. Therefore, the numbers in today's economic databank -namely, the initial jobless claims and durable goods orders - will be very closely scrutinized in order to ascertain the likelihood that markets could squeeze out a further cut in rates by the Fed next week and thus have one more excuse to rally before the summer doldrums set in.
On a final note, if you are interested in silver (and today's Mitsui news gives additional some reasons to be interested in it) and want to get the real picture of what is going on in that market, do yourself a favor and make a small investment into the CPM Group's 2008 Silver Yearbook, set to be released on the 29th of the month. Rather than trying to decide which particular silver pundit may be in possession of the correct set of facts regarding current market conditions, you now have the opportunity to go straight to the source that actually gathers and dissects data for a living and learn the hard numbers and actual trends in the metal. Kitco is a proud sponsor of this quality research and we believe you will benefit from delving into its contents. You will find the book available here: http://store.cpmgroup.com/