Fundamental Precious Metals (2011-03-10)

<h3>Tranquility prevails, sending commodities lower</h3>
By @ibtimes on

Tranquility prevails, sending commodities lower

Gold slashed yesterday's gains and headed south to target the support at $1,425.00 after loads of data received by markets provided a clearer picture for the outlook of global recovery. Gold is expected to retreat after advancing to a record due to investor's sellout to profit from elevated prices.

Bullion for immediate delivery dropped in trading to $1,428.10 an ounce, compared with the opening levels of $1,430.65 an ounce, while setting a high of $1,431.80 an ounce and a low of $1,431.80 an ounce. Futures fell 0.08% to trade at $1,428.400 an ounce.

Gold followed the drop of oil as concerns from Libya violence and inflation eased. Crude retreated from 29-month high, while gold returned to trade near the pivot level of 1,425.00 an ounce.

Oil retreated as Kuwait's oil minister said that OPEC to hold an urgent meeting to determine a new quota for production in order to ease concerns about Libya's unrest that offset trading in oil and sent the black metal above $100.0 a barrel.

Currency fluctuation and inflation concerns drove the precious metal to gain more than 30 percent in 2010, while pushing the metal to record an all time record at $1,444.75 on March 3, 2011.

Today's BoE rate decision follows Bank of Korea's rate hike to 3.0 percent, while New Zealand Central Bank slashed rates to the lowest level on record to 2.5 percent. Spain witnessed debt rating downgrade by Moody's Investors Services to Aa1 from Aaa, while changing the outlook to negative.

BoE is highly expected to preserve rates at 1.0 percent and APF program at £200.0 billion in effort to support the economy that contracted during the fourth-quarter of 2010 by 0.6%, this is compared with statement's by ECB officials that board members may consider raising rates as soon as April in effort to tackle elevated inflation levels in the 17-nation economy.

UK's economy faces inflation threats, shortfall in economic conditions along with the government's austerity measures that aims to lower debt.

The Euro lost grounds against the dollar, which sent the single currency to appreciate further against a basket of currencies, but analysts predict that the Fed will keep its rates near record low at 0.0%-0.25%, which would send the dollar to depreciate further, accordingly, providing another supporter for gold to ascend due to the inverse relationship between commodities and the dollar as they are a dollar weighted investment tools.

Inflation threats across the world also drove the metal higher, where recently; China and Indonesia, raised rates this year, in effort to limit the inflation bubble and cool growth. China unexpectedly reported the biggest trade deficit in seven years as exports rose by 2.4 percent in February from a year earlier, while imports surged by 19.4 percent.

The S&P GSCI index closed trading at 715.96, higher by 2.60 percent, while the RJ/CRB commodity index closed at 360.23, after dropping 0.86 percent.

The dollar rose against the euro that suffered from Spain's downgrade, sending the US dollar index, which tracks the performance of the currency against six-majors, to ascend and trade at 77.030, compared with the opening levels of 76.876.

Technically speaking, the metal's trend remains to the upside as far as the support at $1,390.00 an ounce remains intact, while the 100-day MA support level is set at 1,374.00 an ounce.

Gold's trading remains above the support at 1,425.00 an ounce, where if breached it will pave the way for the pair to test the support at %1,410.00 an ounce, but the general trend remain to the upside with initial targets set at 1,440.00 an ounce and probably return to trade near the achieved record around $1,460.00 an ounce.

Major Metal Fixing

As for metal Fixes (Mar 9); Gold fixed at AM Fix was set at $1,431.50 an ounce while the PM fixing (MAR 9) was set at $1,431.00 an ounce; meanwhile silver fixing was set at $37.17000 an ounce and Platinum AM Fixing (Mar 9) was set at $1,813.00 an ounce, and at 1,811.00 an ounce during the PM fixing (Mar 9); finally ending with Palladium AM fixing set at $798.00 at (Mar 9) AM fixing, while the PM fixing (Mar 9) was set at $800.00 an ounce.

Other Metals

Silver for immediate delivery traded at $35.79 an ounce compared with the opening levels of $36.09 an ounce, while setting a high of $36.17 an ounce and a low of $35.70 an ounce. Silver future contracts traded lower by 0.59% or 0.212 to trade at 35.835 an ounce

Platinum for immediate delivery traded lower by $1.50, at $1,793.00 an ounce, while Palladium dropped by $2.50 to trade at $772.00 an ounce.

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