The power of Gold
After the release strong American earnings, investors were tempted to enter rising American and Asian stock markets as well as commodity markets that is under a positive influence. Speculators were unable to overcome the temptation of profit on the great rise in stocks, though suspicion is spreading among investors of a possible correction wave after these huge gains that stocks witnessed.
Precious metals have not lost their appeal as their market is witnessing an uptrend, despite investment and speculative opportunities in the stock market. In general, the inflow of funds into metals as alternative investments had compensated for the loss of demand for a safe haven and hedging.
The Dow Jones yesterday closed at its highest level since September 2008 as it climbed to 11123.11, while the S&P 500 closed at 1210.65. Oil is trading with a rise today as the reported drop in US reserves of crude oil and Motor Gasoline. S&P GSCI gained 8.49 points and closed at the highest mark since September 2008 of 552.41, as speculators and investors surged into the commodity market to exploit the upside gains.
China reported a strong first quarter of 11.9% that exceeded projections, while fears of further credit tightening slightly eased by slowing inflation that dropped to 2.4%. These announcements have significantly fed the flames of confidence in the financial markets, which seem to be nourishing further with each day.
Precious metal markets where not bypassed by the positive impulse that is affecting financial markets. Demand was focused on alternative investments, though current trading is also affected by speculators' demand on futures. The 0.32% rise in New York trading yesterday, had compensated for the losses gold took in the prior day. Silver had also climbed yesterday by 1.10% suggesting a strong speculative force in the market that pushed silver to $18.42 while platinum gained 0.76% to close at $1728.00.
New York trading however didn't flow parallel with London, where gold fell to $1159.00 from $1153.75, though after picked up the pace in New York closing at $1154.80. Platinum closing price in London was inline with New York's.
Metals continue their uphill climb today, as gold is currently trading at a 0.14% rise at exactly 1:35am EST, though trading has relatively slower due to the shift of funds into the stocks and commodity markets. But we stress the absence of fear for gold to fall as it is well supported by strong demand and speculation forces.
Silver and platinum have strolled downwards today falling 0.05% and 0.41% and currently trading at $18.41 and $1712.00 respectively. Profit taking, as speculators shift to commodity and stock markets, can be seen as the main culprit behind this mild decline of these two metals. Being not only precious, but also industrial metals, silver and platinum bore profit taking as Industrial production in Japan shrank in February by 0.6% while Consumption capacity failed to make any improvements.
Precious metals markets are expected to remain relatively idle with possible intraday downtrends as the stock and commodity markets draw the attention of investors. Nonetheless, as the prices of metals (especially gold) are expected to rise, alternative investments are gaining more and more popularity. We thus maintain our projection for the medium term upside trend, though without the exclusion of possible fluctuation and some downward corrections.
Precious metals maybe biased upward today, if the investments' concentration on commodity and stock markets manages to devaluate greenback slightly, and especially if oil settles above $86.00 per barrel. Gold may be indirectly affected by the level of confidence in the market, while data from the American Industrial Sector is bound to leave a mark on silver and platinum.
Shall gold be a safe haven, an alternative investment or a hedge, gold will always remain lucrative and bullish especially when the dollar is being pulled down by market forces.