Good morning ...
Gold started strong, rising to $953 in Hong Kong, but encountered selling in London that took it down and then, after some gains in the first hour of the New York session on Thursday, further selling that kept it on a downtrend for the rest of the day, to finish at $939.30, down $6.20. Overnight, gold has fallen off.
Platinum had a strong day and, though it came well off its European highs, still closed at $2052/oz., up $33. Overnight, platinum is trending lower.
Silver peaked at $18.70 in London, then followed gold down, closing at $18.24, down 6 cents. Overnight, silver is slightly lower.
One good up day does not a trend make, as gold and silver bulls found out yesterday, although platinum turned in a second straight strong performance.
The big determinators failed to provide any definitive direction for the metals, as the dollar firmed up well, after falling to a new low against the euro, while crude also pulled back from record highs.
For the moment, $940 in gold appears supportive and the market could still aim for $960 before significant profit-taking emerges, said Kitco's Jon Nadler.
The dollar's gyrations and crude oil's every price tick will continue to provide the overall direction for gold, Nadler added. Individual investors appear slightly skittish about jumping into fresh long positions at the moment and may hold back until a clearer uptrend is confirmed.
James Moore, of TheBullionDesk.com, concurred, writing that, Given the increased concerns about inflation, coupled with recessionary fears in the U.S. and the effect this is having on the dollar, we would look for gold to remain firm, testing towards chart resistance located at $955 and $956.
Platinum advanced as traders concern grew over possible shortfalls in South African output because of the serious energy shortage there. Yesterday, Eskom, the country's state-owned utility, reiterated that it will be seven years before the power supply returns to normal levels.
Currencies and Economic News
In the currency market, the dollar firmed against the euro. Late Thursday, the euro was trading at $1.5895 vs. $1.595 on Wednesday.
It was a day of clashing influences, as the buck sank to a record low of $1.5981 early, but came back as the day wore on.
The Philadelphia Fed led the way early, reporting that factories in the region showed weaker conditions in April. The Philly Fed index fell to minus 24.9, from minus 17.4 in March, marking the fifth straight month of negative readings.
But the Conference Board then said its leading indicators gauge of future economic growth rose 0.1% in March. It was the first visit to positive territory after five consecutive monthly declines.
Then the euro got slammed after Jean-Claude Juncker, chairman of the Euro Group, called the common currency's recent rise undesirable.
Juncker's remarks may be the catalyst for an interim euro pullback that the bulls are seeking for renewed buying at lower levels, commented Ashraf Laidi, of CMC Markets US.
The pullback could be brief. Since yesterday euro bulls have tried to make a run at $1.60 four separate times but have been repelled each time with the defense of option barriers at that level remaining intact, wrote Boris Schlossberg, of Forex Capital Markets LLC.
Still, it may just be a matter of time before this seminal level falls, taking out the many stops likely placed there, Schlossberg said.
And looking forward, legendary billionaire George Soros said that, The whole world is facing a very serious financial crisis ... I call it the most serious crisis of our lifetime [because the whole] financial system is seriously disrupted.
In the energy market Thursday, crude for May delivery edged slightly lower, closing at $114.86/barrel, down just 7 cents. May reformulated gasoline gained 1.88 cents, to $2.9578/gallon.
Crude retreated after the contract hit a record high of $115.54 a barrel earlier in the day, as traders continued digesting Wednesday's surprising inventory decline.
The unexpected fall is particularly impressive, wrote John Kilduff, of MF Global. A weaker trending dollar continues to be a key impetus behind the rally in crude oil and the greenback shows no definitive signs of bottoming yet.
And Petroleos Mexicanos, the state-owned oil company whose proved reserves have fallen by more than half since 1999, set a goal of adding 6.3 billion barrels of crude equivalent to its reserves in the next four years.
The base metals were nearly all in the red on Thursday. Copper just can't seem to hold the $4 level, as it shot to $4.10 in the pre-dawn hours but fell steadily from there, finishing just off its intraday low at $3.9701/lb., down 3 2/3 cents. Nickel followed a similar pattern, dropping from its pre-dawn high above $13.50 to a close barely off its intraday low at $13.1633/lb., down 25 3/4 cents. Zinc rallied but then sagged badly, ending at $1.0271/lb., down a penny. Aluminum had an inconclusive day, adding a quarter-cent, to $1.3656/lb., while lead hit the skids, shedding more than 2 1/2 cents to $1.2677/lb.
Copper failed to hang onto its record high as the weak Philadelphia manufacturing report stoked concerns that the slumping U.S. economy will weigh too much on demand to make much forward progress possible.
The decline came despite that, The Codelco strike is causing a pop in prices as the market builds in a fear premium, according to Matthew Zeman, a metals trader at LaSalle Futures Group in Chicago. If the strike causes more supply disruptions, we could see a hefty spike in prices.
The latest word out of Chile was that subcontract workers were fighting pitched battles with police, with all of state-owned Codelco's divisions being struck.
The world's No.1 global copper producer was forced to close its Salvador division, after shutting down the Andina operation a day earlier. Codelco reported that its other three divisions were operating normally, however 2,000 laborers massed at the El Teniente mine, disrupting truck traffic until they were attacked with a water cannon.
There's a lot of fear about the supply situation, Zeman said, predicting that prices could run as high as $4.20 within a few weeks.
John Meyer, head of resources at U.S. investment bank Fairfax I.S. Plc, concurred, saying that, the industry is really struggling to keep up with the pace of demand, and that a super-spike could be on the way.
We think copper is going to break new highs, Meyer said. It could go over $10,000 a ton in a super-spike relatively easily, maybe even to $11,000 or $12,000 a ton.
LME copper for delivery in three months hit $8,880/ton yesterday before declining. That was its highest level ever.
Meanwhile, nickel remains tightly rangebound. As inventories have built up, most uptrends have been generated by technical buying, analysts say. But those builds could quickly become depleted if, as anticipated, the supply/demand picture tightens.
That's what's happening ... see you tomorrow!
NEWS YOU CAN USE
First Majestic Silver Corp. is committed to building a senior Silver producing mining company based on an aggressive acquisition and development plan with a focus on Mexico. The Company presently owns or operates three silver mines in Mexico: The La Parrilla Silver Mine; The San Martin Silver Mine and the La Encantada Silver Mine. Annual production from these three mines was anticipated to be 5 million ounces in 2007.
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