Memories of yesterday's profit-taking faded fast as today's trading session unfolded. Funds came back into the metals and did so with a vengeance, pushing gold to near $994.00 an ounce, crude oil to above $104.00 per barrel, silver to above $20.70 - the list goes on. Practically no commodity escaped the deluge of dollars being unloaded in favor of 'stuff' - cotton wheat, copper, platinum, palladium, nickel, zinc, aluminium - all surged in the wake of the speculative tide manifest among institutional players. Today's show -with all due respect- was stolen by crude oil as OPEC turned its back on its best customer and ignored President Bush's pleas for a hike in output. Pumping more energy into black gold's surge was the reality of Venezuelan tank battalions massing on Ecuador's border.
New York gold futures settled much higher, and spot was seen at $986.60 at last check - up $22.20 or 2.31% per ounce. Although some $8 away from the day's highs, gold's near-term value equation is still seen as reaching for the four-digit price target. This could eventually shortly be achieved amid conditions that have pushed the US December misery index up to 9.1 - a two-year high. Silver spiked 91 cents to $20.66 while platinum rose an impressive $42 to $2267.00 and palladium added $12 to $556.00 while noble metal watchers are awaiting the release of plans to address electricity supply issues by South Africa on the 7th.
The US dollar was last seen diving to 73.38 on the index and was quoted at near 1.53 against the euro again. ADP reported that private sector jobs fell by 23,000 last month. Overall non-farm payrolls grew by 2,000 positions - a far cry from the 20,000 expected by analysts. On the other hand, fourth-quarter US worker productivity was revised up to 1.9%. Along with it, the unit labor costs rose as well, indicating creeping inflation.
In a show of resolve that the US Fed might wish to take a closer look at before going out and jawboning about growth, the strong dollar goal, and inflation concerns, China's Premier Wen Jiabao cited inflation as China's public enemy No.1 and outlined a broad array of measures intended to fight the evils of rising prices. Well, at least growth is something he does not have to worry about. In fact, efforts are being made to bring growth 'down' to around 8% in order to avoid overheating.
Forbes reports that:
The Premier outlined a laundry list of initiatives the government will undertake, including sharply increasing the supply of edible oils, meat and daily necessities; strictly monitoring industrial use of grain and grain exports; setting up a national system to maintain sufficient reserve of staples by adjusting import and export level; tightening government intervention in cases of serial price hikes; launching a national warning system to monitor the agricultural sector; controlling fees for education and medical care; subsidizing low-income groups; curbing rising production costs; and enforcing local government responsibility to stabilize the cost of living.
Look for potentially explosive conditions as markets gear up for tomorrow and Friday's economic data releases and as gold bulls wrestle the dollar WWF-style. Today's objectives were achieved. Tomorrow we may hear Mission Accomplished. This time around, it may actually be true.
A footnote on an important release of another kind: The CPM Group is releasing its 2008 Gold Yearbook next Tuesday. As many insiders know, this is one of the two Bibles of the trade when it comes to the facts and figures related to supply, demand, central bank activity, investor trading patterns, and other relevant data. You now have an opportunity to secure one of these coveted books for yourself, at a bargain pre-release price of only $60 a copy. We will be attending the launch event in New York and will report on the essentials later during the week.
If you are interested, (and, as a gold bug, you ought to be) simply go to : http://store.cpmgroup.com/ and secure your own copy. You will be glad you did.
Happy Trading and Happy Reading.