Good morning …
With the markets closed today for the Good Friday holiday, Daily Resource and Casey Daily Resource Plus will not publish tomorrow. We’ll resume on Tuesday.
Gold was higher in the overseas markets, but once New York opened down it went, dropping almost $10 in the first hour, but then it rallied back past the break-even point near the end of the Comex, only to decline again through the Globex, finishing at $879.20/oz., down 80 cents. For the abbreviated holiday week, gold lost 1.6%.
Platinum soared in the far East, rising as high as $1210, but fell off for most of the rest of the day, ending at $1187/oz., up $12. For the week, platinum gained 2.8%.
Silver followed gold closely, plunging at the beginning of the New York session, but clawing its way back over the course of the day to make it back to positive territory and close at $12.33/oz., up 7 cents. For the week, silver slumped 3.3%.
It was a second consecutive blah day for the precious metals, which might have been expected as money stampeded into equities. Rising oil might have provided a modicum of support, but anything positive it offered was probably offset by the strengthening dollar.
Gold headed into its third weekly decline in a row.
Regarding silver, the Hightower Report noted: “The silver bulls had to be a little disappointed with the action in silver today as copper and platinum and a number of physical commodity markets were very firm. Like the gold market, the silver market was deflated by the decline in US financial sector anxiety and also because of the recovery bounce in the Dollar. Even talk about backwardation and the prospect of developing tightness in the silver market failed to inspire the bulls during the pre-holiday trade today.”
Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong, said the outlook on the economy also appeared better after the G20 summit and some economic data, which was alsodenting precious metal demand. “There's less panic, everything seems to be stabilising a bit more,” Leung said.
Investment in gold exchange-traded funds has also stalled out. Holdings in SPDR Gold Shares, the biggest gold exchange-traded fund backed by bullion, were unchanged for a fourth straight session.
Currencies and Economic News
In the currency market, the dollar was higher against the euro. Late Thursday, the euro was trading at $1.3158 vs. $1.327 on Wednesday.
Analysts said the buck moved in concert with the equities market—especially bank stocks, sparked by strong earnings from Wells Fargo—and that traders were also squaring positions before the long weekend.
Chief happy face provider Larry Summers, President Obama’s top economic advisor,said that better times are just around the corner.
“We are confident that the measures put in place mean that this sense of free fall we've been living with will be arrested in the next few months; that will set a platform for expansion to come,” Summers said.
Among yesterday’s hard data, the Commerce Department said imports into the United States fell sharply again in February as the U.S. trade deficit narrowed to $26 billion, the smallest since 1999. Imports are now down 29% in the past year.
Meanwhile, exports of goods and services in February rose 1.6% to $126.8 billion, the first increase since last July.
That took economists by surprise. “It is worth pointing out, however, that February goods exports were still down almost 5% from December, so it is doubtful that the trend is shifting,” wrote Stephen Stanley, of RBS Securities.
In the energy market on Thursday, oil vaulted higher, with crude for May delivery closing at $52.24/barrel, up $2.86. May reformulated gasoline rose 4.14 cents, to $1.481/gallon.
Crude apparently took its cue from the rampage in equities.
“The stocks are rocking. Wells Fargo is lending money and the banks are passing the stress test so the hopes for oil demand are rising,” said Phil Flynn, of Alaron Trading. “The mood is joyous and that is spilling over into oil.”
But Zachary Oxman, managing director at TrendMax Futures, was considerably less ebullient, saying that, “Crude is in a solid trading range right now and you are seeing some technical buying.
“However, I don't think the [inventories] numbers were enough to drive the market this much, so it seems to me that we were seeing a bit of a trading rally,” Oxman added.
The base metals all posted solid green numbers on Wednesday. Copper rose from the pre-dawn hours straight through the day, finally breaking through the $2 barrier and holding above it to finish at its intraday high of $2.0548/lb., up 9 2/3 cents. Nickel had a day of wild, incessant ups and downs, to little ultimate effect as it closed at $4.8519/lb., up a penny and a half. Zinc was in a slow uptrend, ending at $0.612/lb., up nearly a penny. Aluminum surged after New York opened, bolting to its intraday high of $0.6769/lb., up 2 1/2 cents, while lead had a very strong day, adding 3 1/3 cents, to $0.629/lb.
Copper finally won its ongoing battle with $2, smashing through the mark and never looking back as it posted a fourth straight weekly gain on some renewed demand outlook optimism, bourgeoning world stock markets, and the continued transfer of metal out of London.
“Metal is being pulled from LME warehouses into China,” said Citigroup analyst David Thurtell. “There are a few more green shoots (of recovery) coming out.”
“People can earn a pretty decent margin by taking material out of LME warehouses and selling it into China,” said Gayle Berry, an analyst at Barclays Capital. “There has been some consumer restocking and there is tightness in the scrap market, but not enough to account for the sheer volumes of metal going to China.”
Yes, “The inventory drawdowns are supporting copper prices,” said Michael Gross, of Optionsellers.com in Tampa, Florida, “but the rally in equities [on Thursday] has added some fuel to the fire.”
Gross added that, “We have a nice looking uptrend in copper right now. I think current trends hint that the funds are building some long positions.”
Stockpile data was highly supportive, as inventories monitored by the LME plummeted by 7,425 metric tons yesterday, to 496,775 tons, their lowest in nearly three weeks.
Analysts are suggesting that Chinese imports of refined copper could reach the 300,000-ton level for the first time, surpassing the all-time high of 270,948 tons, set in February.
That’s what’s happening … have a great holiday weekend and see you Tuesday!
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