Good morning ...
Gold had a quiet day, trading between $920 and $930, and finishing in the middle of the range at $925.90/oz., down $4.50. For the week, gold eked out a 1.6% gain.
Platinum had an up and down day, ending at $2008/oz., down $18. For the week, platinum lost half a percent.
Silver took a big hit between the New York open and mid-morning, falling as low as $17.44, but made up a bit of lost ground as the day wore on, closing at $17.74, down 21 cents. For the week, silver dropped a quarter of a percent.
A lackluster day for the precious metals closed a lackluster week, which had to be a bit disappointing given the dollar's weakness.
But the tug of war continues, as on the one hand those convinced that the woeful economy, highlighted yesterday by GE's sagging profits, will send many investors on a flight to quality, while on the other hand there are those who don't believe a high gold price can be sustained in the face of economic disintegration.
Also factoring in was caution ahead of the G7 meetings. There is a small but real possibility that the G7 nations might make a surprise move in support of the dollar, which would be negative for gold.
Gold made its run, and now it's stalled, said Ron Goodis, of Equidex Brokerage Group in Closter, New Jersey, whose words typify the bearish viewpoint. I don't see a reason to be in gold. A bull market has to be spoon-fed news every day, and the risk appetite just isn't there for gold. Gold may go to sleep for a couple of months.
But Peter Grandich, editor of the Grandich Letter, writes that gold Appears to be building a base after a massive rally this past Winter. While seasonal factors come into play in a couple of months, worldwide economic and political concerns should keep us from seeing any sharp corrections.
And considering how closely gold has been tracking the dollar, Grandich's medium-term currency prediction is notable: So long as economic weakness persists, rallies should be just bear market corrections. Somewhere down the road, when ... the inflation genie is out of the bottle to all, then we could see a significant dollar rally as interest rates rise sharply. But that is more likely at the minimum, 12-24 months from now, if not longer.
Currencies and Economic News
In the currency market, the dollar sank against the euro. Late Friday, the euro was trading at $1.5809 vs. $1.5741 on Thursday.
The day's most important number was University of Michigan/Reuters consumer sentiment index, which fell to 63.2 in early April from 69.5 in March, the lowest level in 26 years, and far below economists' expectations for a reading of 68.8.
The report also notes that there have been only a dozen lower readings recorded in the more than 50-year history of the survey. Many of the underlying indices fell to their worst levels in a quarter-century, wrote RBS Greenwich Capital economist Michelle Girard.
Girard noted that current and expected personal finances dropped to their lowest readings since November 1982 and April 1980, respectively.
Otherwise, all eyes were on Washington, where the G7 finance ministers are gathering to ponder the international economic situation. Unless they do something drastic, they're unlikely to move markets much, considering that the dollar skidded even after Joaquin Almunia, the EU economic and financial affairs commissioner, commented on Friday that the euro is overvalued.
But analysts do consider such a remark as indicative that Europeans are becoming increasingly frustrated about the dollar/euro trade. The rising euro puts a serious damper on exports to the U.S.
Separately, Japanese Finance Minister Fukushiro Nukaga said that G7 officials would discuss foreign exchange rates and that officials shared the view that excessive volatility is undesirable and undercuts global economic growth.
In the energy market Friday, crude for May delivery spun its wheels, closing at $110.14/barrel, up just 3 cents. May reformulated gasoline gained 1.52 cents, to $2.8073/gallon.
Crude was flat as the International Energy Agency, an energy adviser to 27 developed countries, slashed its oil demand estimates. The IEA wrote in its monthly report that the world will likely consume 87.2 million barrels of oil a day this year, a drop of 310,000 barrels from last month's forecast.
Resurfacing doubts about demand ... look to have emboldened sellers, wrote John Kilduff, of MF Global.
That could be temporary. There are some developments which point toward an easing supply/demand balance during the second quarter, wrote Credit Suisse analyst Tobias Merath, which should result in lower oil prices during the second quarter.
Crude could decline below $90 a barrel, he said, and that should then represent a good buying opportunity.
The base metals were mixed on Friday. Copper rebounded from Thursday's beating, pushing back over $4, but couldn't hold there as it slipped in later trading to finish at $3.9797/lb., up 2 2/3 cents. Nickel spent some time above the $13 mark but declined from mid-morning on, closing at $12.7822/lb., down nearly 21 1/2 cents. Zinc prolonged its slump, ending at $1.0321/lb., down more than a penny. Aluminum traded jaggedly but wound up adding more than a third of a cent to $1.3713/lb., while lead soared in the pre-dawn hours and then traded sideways, tacking on nearly 3 1/2 cents, to $1.3266/lb.
Copper got a boost from the weaker dollar, as traders scurried for a hedge against inflation.
There's a lot of speculative money out there that's looking for a home, and it's just been pouring into copper, said Ron Goodis, of Equidex Brokerage Group in Closter, New Jersey. This market just doesn't look like it wants to stop.
Falling stockpiles also supported copper. Inventories monitored by the LME declined by 950 metric tons yesterday, to 115,150 tons, the lowest level in nine months and equal to only 2.5 days of global demand.
Concurrently, inventories monitored by the Shanghai Futures Exchange rose modestly by 695 metric tons in the week ending April 10, but import data revealed that China's March copper imports rose 6 percent.
Predicting future market direction in the short terms is liable to be tricky. At these high levels, increased volatility is to be expected and as such bouts of consolidation are likely, BaseMetals.Com analyst William Adams said.
Meanwhile, the China Industry Research and Investment Analysis report, from researchandmarkets.com said that Aluminum price is rising because of a supply shortage. High demand growth for primary alumina in China will be a key support for prices going forward.
The supply is tight and the demand is higher than ever. China is the world's largest aluminum producer but there is a scarcity because of snowstorms in China in 2008. On the demand side, China has become the world's largest aluminum products maker and consumer. Chinese demand this year will be about 14.9 million tons, a 24 percent rise from 2007. The country will account for 35% of total demand by 2020 from 13% in 2000.
That's what's happening ... have a great weekend and see you Tuesday!
NEWS YOU CAN USE
Consolidated Abaddon Resources Inc. is a Canadian uranium exploration company developing properties in the Athabasca Basin of Northern Saskatchewan and the Sims Basin of Labrador. Property partners include Denison Mines Corp. and Triex Minerals Corp.
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