Gold's brief foray above $900 ended overnight as the old reliable combination of a rising dollar and declining crude oil values brought the precious metal back to near $890 per ounce. Market players remained mindful of yesterday's calls for a probable global economic slowing by the IMF and of Ben Bernanke's more pessimistic tone about the US economy during congressional testimony. Japanese currency strategists have called a turn in the rise of the euro following a double top against the dollar and foresee a $1.53 target for it within perhaps as little as ten days. For the moment, the greenback was up .49 at 72.75 on the index and was threatening to break $1.55 vis a vis the euro.
NYMEX trading opened lower this morning, with gold shedding $11.70 quoted at $892.30 per ounce as the trade geared up for a second installment of the Bernanke interrogation on Capitol Hill today. Jobs data in the pipeline for today and tomorrow may still give players excuses to sell the dollar but the strategy is wearing as thin as Mr. Bernanke's incessant rate cuts since September. He in fact dropped hints that the machete-wielding campaign may be drawing to a close shortly. Silver fell back under $17 as fresh selling emerged. The metal lost 30 cents to $16.91. Platinum was the sole gainer on the open, rising $4 to $1967.00 while palladium dropped $1 to $443.00 per ounce.
Still convinced that Chindia will keep the commodity supercycle aloft? Still reading articles that all of this is a one-way street? At least the Chin part of the equation may now be in some doubt. According to the Wall Street Journal,
Investment spending on factories and infrastructure, long the main driver of the nation's growth, has begun to ease. Loans are harder to come by, with real-estate developers in particular feeling the effect of government curbs on credit imposed late last year. Some companies squeezed by higher raw-materials costs are reporting smaller profits, leaving them less money to finance expansion. Such a cooling of frenzied investment and speculative bubbles is something China's government has long sought, largely without success. Now, markets are showing the effects.
A slowdown of growth to a single-digit rate [forecasts call for a drop to 9.4% growth this year] will shock the markets, we believe, and may well trigger a retracement of prices for energy and industrial commodities, said Carl Weinberg, chief economist for High Frequency Economics, in a research note this week. Look out copper, look out silver.
Stay on alert for the after- effects of the 38,000 higher jobless claims number in the final week of March. A slugfest might ensue between the bulls who read the news as the trigger for the next rate cut and the bears who are not only in control at the moment but have the slowing economy to use as ammo. In any case, the session today and tomorrow will provide no lack of excitement in the commodity pits.