Precious Metals Catch A Bounce
Dec 9th, 2008 | By Doug Casey | Category: Financial NewsGold rose in the far East on Monday, declined from the London to the New York opens, then spent the rest of the day confined within the $770-780 range, finishing at $771.40, up $17.10. Overnight, gold has edged lower.
Platinum peaked near $850 in Europe, and stayed close to the $840 mark through the New York day, easing a bit at the end to $830, up $25. Overnight, platinum has dropped off.
Silver bottomed at $9.70 just before New York opened, then was off to the races, pushing to $10.37 by mid-morning, but failed to hold the $10 level as it sold off from near noon onward, and closed at $9.97, still up 51 cents. Overnight, silver has been flat. (Click here for charts)
It was a strong day for the precious metals as the usual suspects lined up in their favor for a change, with the dollar declining, crude rebounding, and equities markets going on a tear.
Metals “are catching a good wind today — mainly from President-elect Obama’s plan to rebuild America’s crumbling infrastructure,” said Kitco’s Jon Nadler. “The trade sees some potential demand for metals out of this grand project as well as from the likely resuscitation of the U.S. auto industry.”
Frank McGhee, of Integrated Brokerage Services in Chicago, concurred, noting that with “the facts on the positive side today … [there’s a] lot of new buying coming in.”
However, the ever-careful Nadler went on to warn that de-leveraging by speculative funds is not finished. Thus, “Commodities could still be manifesting false breakouts while giving short-term players some isolated opportunities to make a buck,” Nadler said.
Edward Meir, of MF Global, also cautioned that, among other things, “Metal prices are higher on account of a short-covering bounce from extremely oversold conditions.”
But the longer-term trend is evident.
Deutsche Bank analysts nailed it when they said the U.S. may [we’d say will] “employ a weaker dollar to reduce deflation risks.” said. And in that case, “we would expect rallies in the gold price to be based on more solid foundations, in contrast to the false breakouts that have occurred over the past few months.”
Source: Precious Metals Catch A Bounce
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