Nickel had a very sharp late morning rally, pushing it well into positive territory, but it crashed equally hard, closing just off its intraday low at $5.1929/lb., down 20¾ cents. Zinc rallied several times, but they were just blips in a steady downtrend that took it to $0.505/lb., down 2¾ cents. Aluminum moved modestly lower, ending at $0.9122/lb., down more than a penny, while lead was weak, shedding almost two cents to $0.6677/lb.

Copper led the industrial metals lower yesterday, as Tuesday’s positive market sentiment dissipated in a big hurry. Or perhaps the euphoria of a particularly exciting election day just wore off.

“Now that the election is over, the focus is going to go back to the economic data and the outlook for demand,” said Matthew Zeman, a trader at LaSalle Futures Group in Chicago.

In that regard, the grim jobs data surely played in. “The ADP employment number looked horrible for the economic outlook,” Zeman said. “Until we see some signs of life in the economy, copper is going to struggle.”

Nor is there much that’s encouraging coming out of China.

“Spot import trade is still slow-moving and there isn’t much activity going on,” said a source from Beijing Antaike, the state-run nonferrous information provider. “I expect recent price rebound is only short-term and prices are likely to stay weak.”

Beijing Antaike has already revised down China’s likely copper consumption for 2008 to 4.9 million metric tons, as compared with a previous forecast of 5 million. “Domestic consumption in China is likely to stay weak this year,” they said.

But Alberto Bernal, of Bulltick Capital Markets in Miami, was more upbeat, saying that, “Nobody is expecting growth to be even close to what it was in the past, but it would be illogical to argue we’ll have a collapse in Chinese demand … All of these commodities have fallen like crazy in a way that’s ridiculous. There’s been some real overshooting and the most-likely scenario is that prices could rebound from here.”

Source: Base Metals Weak

Platinum also fell off steeply from its European highs, and traded within a tight $10 range through the New York day, ending at $812/oz., down $7. Overnight, platinum has edged higher.

Silver soared in Hong Kong, rising as high as $10.20, but that was it as it dropped off sharply, falling below break-even late in the Comex and coming to rest in the Globex at $9.79/oz., down 7 cents. Overnight, silver is trending higher. (Click here for charts)

It was a very lackluster day for the precious metals yesterday, as early rallies in all of them got snuffed out, leading to minor losses across the board.

Gold got no help from the usual suspects, as the dollar continued its latest advance against the euro, and oil prices sank.

One positive note was sounded by Matt Zeman, a metals trader at LaSalle Futures Group in Chicago, who said that, “Gold took a very steep drop last month, so [we’re due for a] gold bounce on a technical basis.”

Zeman added that, “The dollar has strengthened so much in the past eight weeks that it’s just overdone … There are some buying opportunities here.” And he doesn’t mean in the buck.

As this is a fair and balanced presentation, we should note that at the other (far) end of the spectrum we find über-pessimist Jon Nadler of Kitco, who wrote that: “Investors should sell into rallies and only accumulate at $675, $640, $580, and $540 if those targets are reached … Gold lost some of its safe-haven attributes in this last crisis. Liquidations and deflation are alive and well.”

We agree that liquidations and deflation are alive and well, but they are temporary. Deleveraging will eventually end, and the truly staggering inflation in the monetary base over the past couple of weeks will overwhelm deflation. It is a matter of when, not if.

Overall, as Mark O’Byrne of Gold and Silver Investments notes, the recent rally in mining shares is significant, with the Amex Gold Bugs Index up 15% last week. O’Byrne sees this as “an indication that we are at or near a low in this sell-off,” as the stock indexes “tend to be a leading indicator of a trend reversal in the precious metals.”

Source: Precious metals tread water -  Early rallies snuffed out

Platinum was rangebound through most of the New York day, but rallied strongly after the Comex closed, ending at $825/oz., up $44. Overnight, platinum has fallen off.

Silver went on a very wild ride, pushing to near $9.30 in the far East, jumping off a cliff once London opened, falling below $8.50, shooting back above $9.10 at the New York open, then getting slammed back below $8.60, and finally rising again from late morning through the Globex, to close a most tumultuous day at $9.19/oz., up 14 cents. Overnight, silver is trending higher. (Click here for charts)

It was a volatile day for the precious metals yesterday, but in the end all ended with at least modest gains. Soaring equities probably served to cap any advances somewhat, and falling oil also worked against them, while a weaker dollar helped out.

Extreme unpredictability remains the order of the day, equally with gold as with the stock market. The bull is not quite ready to stampede as yet.

As James Moore, of TheBullionDesk.com, put it, “with volatility still at record levels and hedge funds still seeing large scale redemptions, the metal remains at risk to a bout of selling.”

Matthew Zeman, a metals trader at LaSalle Futures Group in Chicago, states flatly that, “Any big rallies are going to be sold.”

However, Zeman adds, “If and when the credit markets are functioning normally again, they’re going to start talking about inflation, and gold can spike $100 in a day. But now, the biggest reason gold is suffering is that all this money is staying in cash or flocking to Treasuries.”

Zeman believes that if equities markets turn around, that will be positive for metals, rather than drawing money away from them. “You get a bit more risk appetite when equities are doing better,” he notes. “If sentiment is positive, we will see money come back into commodities.”

Meanwhile, the SPDR Gold Trust, the largest gold ETF backed by bullion, stood at 749.21 tons Monday, up 2.15 tons from Friday. It was the first rise since gold held by the fund hit a record high of 770.64 tons on October 10.

Source: Metals rise with stock market -  Silver has wild up and down day.

Platinum was off sharply in Europe, falling well below the $2000 mark, but clawed its way back in New York to almost retake the level, ending at $1999/oz., down $70. Overnight, platinum has edged lower.

Silver got whacked from London straight through the NYMEX, only leveling off in Globex trading into a close at $16.60/oz., down 81 cents. Overnight, silver has edged higher.
(Click here for charts)

It was a third straight down day for the precious metals, and it was a bad one as gold tumbled to a two-week low.

That it would be a down day was no shocker, considering that falling oil prices and a firming dollar aligned the stars against gold and its sisters. But the extent of the damage may have caught some by surprise.

There was also strength in the equities markets to deal with, as well as an avalanche of selling across the board in commodities.

But analysts were mostly abandoning talk that gold will follow oil, and focusing instead on the role of the dollar, which has been buoyed of late by suggestions that an interest rate hike might come before the end of the year.

“With the dollar stabilizing, gold could fall quite a bit,” said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. “There’s a lot of talk about inflation, which works both ways for gold. If the Fed does start tightening, that will strengthen the dollar and could really pop the commodity bubble.”

It’s an interesting equation, for sure. Inflation is dead certain to pick up as the effects of record-high oil and gasoline prices work their way through the economy. One sign of things to come arrived on Wednesday, with the announcement by Dow Chemical that it was raising prices of its products by 20%. Everyone uses Dow products.

So, will gold emerge in its traditional role as a hedge when inflation really starts to pick up? Or will the Fed’s response, which has to be tightening interest rates, hurt gold by propping up the dollar? Stay tuned.

Source: Precious metals slammed once again – Strong dollar, weaker oil cited

Overnight, gold has edged higher in the overseas markets.

Platinum fell as low as $2000 in Hong Kong, but came smartly off that low even though it never made it back to break-even, ending at $2032/oz., down $18. Overnight, platinum has fallen off.

Silver pushed well into the black above $16.80 at the New York open, but then was sold off steadily for the rest of the day, closing at $16.49, down 19 cents. Overnight, silver has been pushing higher.
(Click here for charts)

It was another grind-it-out day for the precious metals, as they struggled to keep their heads above water with both the firm dollar and declining oil moving against them.

The Hightower Report wrote of the day’s tepid action: “The gold market mostly favored the downside in the action on Wednesday which initially seemed to be the direct result of ongoing strength in the US Dollar. However, gold prices did manage to bounce by as much as $6 an ounce off their post report lows with the still mostly Dollar holding in positive ground. The currency trade continues to suggest that a close above the 74.00 level in the June Dollar Index is an extremely critical level and it appears that the gold market is also watching that level as well. In the end, the bull camp in gold might suggest that prices held up relatively well in the face of minor Dollar strength and moderate weakness in oil prices. In fact, a number of physical commodity markets were under pressure Wednesday and even that didn’t seem to add to the initial weakness in gold prices.”

At this point, fundamentals to the contrary, one would have to admit that the bears are pretty much in control.

“There’s no buying interest in gold at the moment,” Matt Zeman, of LaSalle Futures Group in Chicago, stated flatly. And, “The CPI coming in tamer than expected is not going to help,” he added.

And, “I would look for the buck to continue firming,” said Ralph Preston, an analyst at Heritage West Futures in San Diego. “A test of $850 appears to be in the cards for gold on the back of the inflation numbers.”

But on a more upbeat note, Société Générale said in a recent report that while chart analysis shows silver will be little changed to lower during most of May, the price will average $20.25 an ounce in the second quarter. That would be quite a rally.

Source: Precious Metals Slide More

 Nickel followed a similar pattern, dropping from its pre-dawn high above $13.50 to a close barely off its intraday low at $13.1633/lb., down 25¾ cents. Zinc rallied but then sagged badly, ending at $1.0271/lb., down a penny. Aluminum had an inconclusive day, adding a quarter-cent, to $1.3656/lb., while lead hit the skids, shedding more than 2½ cents to $1.2677/lb.

Copper failed to hang onto its record high as the weak Philadelphia manufacturing report stoked concerns that the slumping U.S. economy will weigh too much on demand to make much forward progress possible.

The decline came despite that, “The Codelco strike is causing a pop in prices as the market builds in a fear premium,” according to Matthew Zeman, a metals trader at LaSalle Futures Group in Chicago. “If the strike causes more supply disruptions, we could see a hefty spike in prices.”

The latest word out of Chile was that subcontract workers were fighting pitched battles with police, with all of state-owned Codelco’s divisions being struck.

The world’s No.1 global copper producer was forced to close its Salvador division, after shutting down the Andina operation a day earlier. Codelco reported that its other three divisions were operating normally, however 2,000 laborers massed at the El Teniente mine, disrupting truck traffic until they were attacked with a water cannon.

“There’s a lot of fear about the supply situation,” Zeman said, predicting that prices could run as high as $4.20 within a few weeks.

John Meyer, head of resources at U.S. investment bank Fairfax I.S. Plc, concurred, saying that, “the industry is really struggling to keep up with the pace of demand,” and that a “super-spike” could be on the way.

“We think copper is going to break new highs,” Meyer said. “It could go over $10,000 a ton in a super-spike relatively easily, maybe even to $11,000 or $12,000 a ton.”

LME copper for delivery in three months hit $8,880/ton yesterday before declining. That was its highest level ever.

Meanwhile, nickel remains tightly rangebound. As inventories have built up, most uptrends have been generated by technical buying, analysts say. But those builds could quickly become depleted if, as anticipated, the supply/demand picture tightens.