Precious Metals Rally – Bargain Hunters Observed on the Prowl
May 6th, 2008 | By Doug Casey | Category: Gold MarketGold moved steadily higher from the overseas markets straight through the New York NYMEX and Globex sessions on Monday, finishing at its intraday high of $874.00, up $17.20. Overnight, gold edged slightly higher in London.
Platinum climbed higher in small fits and starts, from a low of $1890 in the far East to end at its intraday high of $1927/oz., up $27. Overnight, platinum is slightly lower.
Silver leveled off after posting solid gains in the far East, shot higher to peak at $16.80 in the second hour of New York trading, but then slipped later in the day to close at $16.69, up 33 cents. Overnight, silver pushed higher in Hong Kong but has pulled back to flat.
(Click here for charts)
The bargain hunters among precious metals traders surely came out of the woodwork yesterday, a welcome sign after the beatings absorbed last week. And all last month, for that matter, as gold fell by 6.1% in April, the biggest monthly drop in four years.
It was also a very supportive day on the part of the usual suspects, surging energy prices and a dollar that has begun collapsing again after its strength in the wake of the latest round of interest rate cuts.
Kitco’s Jon Nadler tabbed the recovery as “ultimately attributable to some bargain hunting offtake ahead of India’s May 7 auspicious date, but more so to the … rise in crude oil on the heels of Nigerian- and Iranian-driven apprehensions.”
Nadler noted that May 7 marks the day of the Akshaya Tritiya Festival in India, the Golden Day of Eternal Success. It is “probably South India’s biggest gold-buying festival of the year,” he said.
As the correction runs its course, it’s well to remember that gold futures averaged just $701 an ounce in 2007. Expect that to ramp up to an average of $906/oz. this year, wrote Citigroup analyst John Hill.
Since jewelers account for some 60% of gold purchases, “It will be important for damped fabrication demand to recover before gold can move higher,” Hill said. “The key will be downside support from fabrication, probably three to five months out.”
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