Crude oil rallies to a 17-month high of 84.7 in NY session as economic data show that the world economy is recovering. The front-month WTI contract extends gains on the first day of the second quarter after surging +5.5% in 1Q10.
PMIs in China, India and Europe beat market expectations. In China, manufacturing PMI advanced to a seasonally adjusted 55.1 in March from 52 a month ago. The stronger-than-expected reading indicates the manufacturing sector in the world's third economy continues expansion. In India, PMI fell to 57.8 from 58.5 in February. However, a reading above 50 indicates expansions and the index suggests India's manufacturing activities have been growing for 12 months.
In the 16-nation Eurozone, similar reading improved to 56.6 in March from 54.2 in February. The market had anticipated an increase to 56.3.
The market focus today is US' ISM manufacturing index which probably expanded to 57 in March from 56.5 in the prior month.
Gold price advances in tandem with energies. The benchmark contract surged for a second day to 1125. Other members in the precious metal complex rise more strongly as they have more applications in industrial activities.
Silver jumps +1.85% to 17.86. For PGMS, platinum soars +1.28% to 1667.9 while palladium rallies +2.82% to 493.5.
The chart below shows that gold is mainly used in jewelry and for investment. Industrial application only takes up around 10%. On the contrary, industrial use represents over 70% in silver while investment only takes up around 5%.
In PGM, industrial applications, mainly as autocatalytic converters, take up over 50% in both platinum and palladium. Shares in investment demand were only single digit although this should increase this year.