Precious metals: a window of speculative opportunity
Precious metals advanced yesterday in New York and speculative powers were dominant after crude oil spiraled towards $83 per barrel. At the same time the dollar continued to decline as the index gauging greenback's movement versus six major counterparts declined below 81.00 levels. Those facts increased the appeal of metals which managed to attract speculative demand and head to the upside.
CPI estimate for March revealed that inflation in the Eurozone has raised the plank to record 1.5% on the year, as analysts anticipate a recovering inflation rate while some went as far as projecting that inflation will spin out of control later this year. These expectations, along with the January inflation of 0.6% in Canada, have stimulated demand on precious metals and reignited speculative activity in the market.
While the European and British economies seem to be nourishing, across the Atlantic news weren't as optimistic. Data released yesterday in the United States showed continuing down force on the labor sector with factory orders also declining, which caused the dollar to fall slightly.
Commodity markets saw differing performance, as the S&P GSCI index had risen by 3.70 points gaining from energy assets to close at 530.16, while RJ/CBR index had moved the opposite way by loosing 0.38 points and closing at 273.34 points. Despite these mixed results, oil had left a positive landmark on the commodity market.
In New York, gold closed at $1113.60 per ounce as it climbed 0.93%, raking in more than $10. Whereas the London PM Fixing was set at 1115.50 rising form the AM Fixing at $1109.50 per ounce. Silver also took an uphill course by gaining 1.16% and closing at $17.48 per ounce, and Platinum also went with the current appreciating $26.00 or 1.61% closing at $1643.00 per ounce.
Today's trades were marked by stability across precious metals with minimum downside correction; meanwhile at 2:15am EST gold is trading at 1112.70 and platinum at 1641.00. Silver had violated the calmness of gold and platinum by leaping upward to reach at this moment 17.52, though it is still in yesterday's New York trading range of $17.65 and $17.41 per ounce.
Manufacturing activity in the U.S. is expected to slow but remain within adequate growth levels, as we anticipate data form the U.S. manufacturing, labor and construction sectors, and manufacturing sector in the United Kingdom and Eurozone.
These indicators are expected to move silver and platinum, due to their use as components in manufacturing apart from being precious metals; while gold will be affected by fluctuating dollar and oil with the release of the data.
We sum up by concluding that inflation rates in the U.S. have returned to normal at 1.8%, while European inflation is also recovering from its prior slump to 1.5%. The resolution of the Greek crisis and visible positive movement in the economies of the United Kingdom and Canada also add optimism to the market.
Precious metals are expected to move with the upbeat global economies over the medium term, with projections of rising inflation and stability of the global economy creating more demand. And while the precious metals market may be susceptible to today's data, succumbing to the change in the dollar index and oil price, future demand expectations will be under the scope as well. That is why we expect volatile trading in the markets throughout today and tomorrow, and do not exclude the possibility of downside corrections.