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Precious Metals

Gold traded sideways in the Far East then displayed a nice upward trend through London and New York to finish at $959.00/oz up $17.50. Overnight, gold has moved higher.

Platinum was flat through Hong Kong then off to the races starting about 8 a.m. in New York and managed to tack on an impressive $65.00 before all was said and done, ending at $1123/oz. Overnight, platinum is down slightly.

Silver's path tracked gold to a T. The precious metal gained 68 cents on the day to close at $13.57/oz. Overnight, silver is trending higher.

It was a second straight day of big gains for the precious metals. While gold didn't fare quite as well as the day before, silver and platinum were up even more.

Bullion's sharp rise on Thursday is once again attributed to the continuing dollar decline following the U.S. Federal Reserve's not so surprising announcement a day earlier that it intended to buy long-dated U.S. Treasuries along with U.S. mortgage and agency debt in a big way.

In addition, the SPDR Gold Trust said its holdings rose to a record 1,103.29 metric tons by March 19, up 18.96 tons, or 1.7%, from the previous day.

The underlying bullish outlook remains firmly intact with the past 4 weeks' major corrective phase now fully confirmed to be complete, Newedge said in a report. Expect values to head back towards the February peaks in and around the $1,005-$1,010 zone in the days and weeks ahead.

In company news, Barrick Gold Corp said on Thursday it will issue $750-million in debt and use the proceeds to fund new mine construction and invest in the company's subsidiaries, and for general corporate purposes.

Barrick, the world's top gold producer, said it had entered an underwriting agreement to issue 6.95% notes due 2019 through a syndicate of underwriters led by Morgan Stanley, J.P. Morgan and Citigroup. The offering is expected to close on March 24. The issue comes as several gold miners have raised funds -- most through equity issues -- to take advantage of strong demand for gold assets in an otherwise weak market.

In a statement just after Barrick announced the news, Moody's Investors Service assigned a Baa1 senior unsecured rating to the notes, and said it expects Barrick will use the funds to finance moderate size strategic acquisitions and to fund projects such as the Pascua Lama deposit in South America. Moody's also said Barrick has $1.4 billion in cash and an unused revolving credit facility worth $1.5 billion.

Currencies and Economic News

In the currency market, the dollar continued to fall against the euro and most other world currencies. Late Thursday, the euro was trading at $1.3671 vs. $1.3485 on Wednesday.

The dollar was sharply lower against other major currencies Thursday in the wake of the U.S. Federal Reserve's decision to aggressively pump liquidity into the financial system, but it was above session lows in late trading according to a MarketWatch report.

The aggressive U.S. dollar sell-off came to an end following a last hurrah in early North American trading. Euro/dollar had rallied almost 5% in less than 24 hours following the Fed's decision to embark on aggressive quantitative easing, said Matthew Strauss, senior currency strategist at RBC Capital Markets.

The dollar had plunged Wednesday, after the Fed's announcement that it would buy $300 billion worth of U.S. government debt in coming months.

For the dollar, the sentiment shift came hard and fast, and it came at a time when the buck already looked due for a rest, technically speaking, said John Ross Crooks of Black Swan Capital, an independent currency advisory and trading firm.

Stephen Gallo, head of market analysis at Schneider Foreign Exchange, said the move doesn't necessarily spell the end of the dollar's ability to rise on economic and financial turmoil. But he added that it does mark the start of a more level playing field, now that the Fed has joined the Bank of England, the Bank of Japan and other central banks in monetizing debt.

We feel that the period of aggressive dollar strength is quickly coming to an end, but it doesn't mean that the positive correlation between the dollar and risk aversion is no longer in play -- although it will be interesting to see in future sessions just how much the dollar strengthens when equity markets slide, Gallo said in a research note.

On the economic front, more bad news.

The number of people collecting state unemployment benefits jumped by 185,000 to a record seasonally adjusted 5.47 million in the week ending March 7, while new claims dipped by 12,000 to 646,000 in the week ending March 14, the Labor Department reported Thursday. The 185,000 weekly increase in continuing claims was the second largest in the past year.


In the energy market on Friday, crude for April delivery rose $1.97 to close at $51.61/barrel. April reformulated gasoline finished up more than 7 cents at $1.4373/gallon.

MarketWatch reported that crude-oil futures soared more than 7% on Thursday to end at their highest level in nearly four months, as the Federal Reserve's plans to buy government bonds ignited hope for an economic recovery and increased energy demand.

The Fed's plan to purchase as much as $1.15 trillion in U.S. bonds and mortgage-backed securities also sparked inflation worries and led the dollar to plunge, which also pushed up dollar-denominated oil prices.

It is all the Fed. It changed the fundamental picture for oil overnight, said Phil Flynn, vice president at Alaron Trading. You can look at the dollar and the possibility that these lower rates will stimulate growth and increase demand.

It's more difficult being short oil now because the Fed has unlimited printing power, he added.

And we've already witnessed Bernanke's willingness to exercise that power on countless occasions.

Base Metals

Base metals were all winners on Thursday. Copper jumped more than 8 cents to close at $1.7828/lb. Nickel added nearly 8 and one-half cents to finish at $4.5027/lb. Zinc tacked on 3 pennies, ending at $0.5618/lb. Aluminum gained about 3 and two-thirds cents, closing at $0.6490/lb., while lead moved to $0.6010/lb., up 1 and one-third cents from the previous session.

Bloomberg reported that copper rose above $4,000 a metric ton [about $1.81/lb.] for the first time since November in London, gaining with other metals as a Federal Reserve plan to buy assets pulled the dollar lower and fanned speculation about an economic rebound.

All markets are significantly higher, largely because of the impact of the Fed announcement last night, and the dollar is very weak, Alex Heath, head of industrial metals trading at RBC Capital Markets in London, said yesterday.

Copper inventories in LME-monitored warehouses fell 0.3% to 493,450 metric tons, extending their decline since Feb. 25 to about 10%. Canceled warrants, or metal earmarked for delivery, fell 825 tons to 22,650 tons and now account for 4.6% of total inventories, down from 12% on March 4.

In technical terms, copper would have to close for two days above $3,840 a ton [about $1.74/lb.] for prices to move to about $4,190 [$1.90/lb.], the next so-called resistance level, Edward Meir, an analyst at MF Global in Darien, Connecticut, wrote in a report.

However, we would advise caution at these levels and would not be chasing the current bounce, he wrote. The market has done too much, too soon, given the still-daunting macro backdrop.

The metal is unlikely to sustain its rally because the gain is based on expectations that the Fed plan will kick-start the U.S. economy, rather than any actual revival, said Robin Bhar, an analyst at Credit Agricole SA's Calyon unit in London.

It may well do, but I think we are talking months, not hours or days, he said. We are in completely unknown waters.

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


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