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Precious Metals

Gold traded slightly above $910 throughout Hong Kong and London then was off to the races mid-morning in New York gaining $26.50 from the previous day's close to finish at $932.40/oz. Overnight, gold is sharply higher.

Platinum jumped up as soon as trading opened in the Far East then had a slight upward trend the rest of the day, ending at $1062.00/oz., up $16.00. Overnight, platinum has moved higher.

Silver followed a similar path to gold yesterday, shooting upward around 10 a.m. in New York to close at $13.24/oz., up 33 cents. Overnight, silver is way up.

Gold came roaring back yesterday, eating up three of the past eight days of losses.

Here's what The Hightower Report had to say about the bounce-back in gold: Clearly the gold market was back onto the flight to quality track and given the amount of uncertainty toward a number of bellwether companies, the sharp slide in the equity markets and the amount of policy changes coming out of Washington one can understand a strong flow toward gold and the precious metals. In fact, with gold, the Dollar and the Yen all three rising in tandem one got the sense that the safe haven play was really back in vogue. With GE even being called into question and company officials denying the presence of financial issues, one could suggest that a host of blue chip companies were being scrutinized intensely. As suggested in the mid day coverage the scheduled US data wasn't as bad as expected and recently the presence of decent numbers has benefited gold perhaps because better than expected numbers downplays the deflationary spiral talk.

That same report touched on what's going on with silver too: The silver market followed in the footsteps of the gold market on Thursday and that is somewhat surprising considering that silver attempted to diverge from gold early in the trading week. Clearly the silver trade is embracing the flight to quality angle and not the physical commodity focus and for that reason silver joined the gold, Dollar, Yen and US Treasuries in a flight to quality type rally.

Currencies and Economic News

In the currency market, the dollar rose against the euro. Late Thursday, the euro was trading at $1.2548 vs. $1.2651 on Wednesday.

The greenback also gained from safe-haven buying, as U.S. stocks withered ahead of Friday's key jobs data. The Dow Jones Industrial Average ended down nearly 300 points, or 4.1%.

Stock indexes in the U.S. had snapped a five-day slide on Wednesday amid hopes that an economic stimulus plan from China would help jolt the global economy back to life. Commodities and industrials shares surged. But those gains evaporated on Thursday after China's premier said that no additional stimulus was required to help the nation bounce back from its declining growth.

In other news, MarketWatch reported that U.S. retailers' February sales showed their best performance in five months, aided by pent-up demand for new spring merchandise, and recent holiday related sales.

Even so, the better-than-expected performance does not mean there's light at the end of the tunnel for retailers in the face of the across-the-board consumer cutbacks, analysts said. Some results were also driven by promotions that hurt profit margins. March sales will likely be negative with a calendar shift of Easter to April, they said.

Total retail comparable sales were flat in February, compared to the original projection of a drop of as much as 2%, according to the International Council of Shopping Centers (ICSC).

Discounters and value-oriented retailers remained the outperformers, led by Wal-Mart Stores Inc., where sales jumped 5.1%, more than double the average analyst estimate.

Absent the boost from Wal-Mart, total sales would have declined 4.1%, with apparel chains and department stores remaining the laggards, ICSC said.

Are retailers out of the woods yet? No, said Peter Kwiatkowski, who helps manage about $19 billion in assets at Fifth Third Asset Management, which owns retail stocks including Wal-Mart. Everybody is hurting. What do you have in your toolbox to deal with the environment is the key. Wal-Mart definitely has a lot of momentum right now.

With the economy in recession and rising job losses sending consumer confidence to record lows, value-oriented retailers, led by Wal-Mart, have won over customer traffic and loyalty with consumers increasingly concerned about their budgets, analysts said.


In the energy market on Wednesday, crude for April delivery fell $1.77 to close at $43.61/barrel. April reformulated gasoline finished at $1.3127/gallon.

Oil fell as investors anticipate more job losses in the U.S., the world's biggest oil consumer.

The Labor Department is expected to report today the biggest nonfarm payroll loss in nearly six decades. Also adding to the downward pressure on oil, the U.S. dollar rose against the euro and the British pound after interest rate cuts in Europe.

A rising dollar as a consequence of interest rate cuts in Europe and anticipation of a poor jobs report tomorrow should keep crude prices under pressure today and tomorrow, wrote Michael Fitzpatrick, an analyst at MF Global.

The number of workers filing for state unemployment benefits fell by 31,000 to a seasonally adjusted 639,000 last week, while the smoothed average of continuing claims moved higher into record territory, the Labor Department reported Thursday.

The report came a day before the Labor Department reports today on nonfarm payrolls. Economists surveyed by MarketWatch expect payrolls to fall by 650,000, the worst job loss in nearly 60 years. They expect the unemployment rate to rise to 8% from 7.6%.

Market participants are reluctant to position themselves long in the market ahead of the U.S. non-farm payroll numbers tomorrow, which could further highlight the deteriorating economic conditions, wrote Nimit Khamar, an analyst at Sucden Financial Research.

Base Metals

Base metals were back in the red on Thursday. Copper fell 4.35 cents from Wednesday's close to $1.6306/lb. Nickel lost more than 19 cents to finish at $4.3242/lb. Zinc managed a small gain of just under one-half a penny, ending at $0.5405/lb. Aluminum lost slightly more than 1 cent and one-half, closing at $0.5785/lb., while lead moved to $0.5214/lb., up about two-thirds of a cent from the previous session.

Bloomberg reported that copper futures fell for the first time in three days after Chinese Premier Wen Jiabao indicated the government doesn't need to increase stimulus spending to achieve its target for economic growth.

Collapsing exports have dragged China, the world's biggest metals user, to its weakest growth in seven years. Yesterday, copper surged to the highest price since late November on speculation additional stimulus spending in China would boost demand for metals.

There was no increase in the overall size of the stimulus package, something that may be disappointing the markets, Edward Meir, an analyst at MF Global Ltd., said in a report.

People were looking for an increase in the China stimulus and that was increasing optimism, said Matthew Zeman, a trader at LaSalle Futures Group. It's back to reality now.

That's what's happening... see you tomorrow!


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