Platinum moved progressively lower in the overseas markets, but really hit the wall just after New York opened, falling $20 in an hour before going flat for the rest of the day and ending at $1115, down $32. Overnight, platinum has edged higher.

Silver suffered a precipitous drop, from $14.03 in the far East to $13.67 at the New York open, but amazingly it nearly clawed its way back into the green by day’s end, closing at $13.94, down 5 cents. Overnight, silver is sharply higher. (Click here for charts)

Though platinum got slammed, gold and silver both eased only mildly yesterday, which would probably have been expected as oil backed off and, more importantly, the dollar rebounded against the euro.

“Gold prices eased as risk appetite made a comeback and was seen as a hunger for stocks and certain currencies,” wrote Kitco’s Jon Nadler. He noted that, “Demand from exchange-traded funds “has gone into drought mode since reaching a record high last month.”

True enough. Holdings of the SPDR Gold Trust (NYSE:GLD), the biggest exchange-traded fund backed by bullion, went gangbusters through last month, reaching a record of almost 1,128 metric tons (36.27 million ounces) last month.

Since then the vaults have been lightened, so that now 1104 metric tons (35.5 million ounces) remain.

“The safe-haven play is becoming less relevant at the moment, largely because we are beginning to see more positive economic signals,” said David Wilson, an analyst at Société Générale in London.

But perceived positive economic signals, coupled with the precariousness of world politics, has many analysts thinking as gold bulls.

This week’s trade in gold is expected to progress in a generally higher direction, with prices potentially reaching $935.80 an ounce,” wrote Tom Pawlicki, of MF Global (NYSE:MF). “Support will come from worries that inflationary pressures are growing, from increased tensions in northwestern Pakistan, and from Venezuela’s seizure of oil assets.”

Source: Gold, Silver Modestly Lower

Traders made the day about the continuation of hope for an economic recovery, buoyed by the consumer and manufacturing numbers, and that overrode the obvious supply glut.

But analysts remained skeptical. “Market participants are taking solace from any optimistic signs the economy shows,” said Michael Fitzpatrick, of MF Global (NYSE:MF), but “we are more convinced than ever that the market is being set up for a short sharp reversal lower, perhaps to $40.”

The natgas arena showed a spark of life for the first time in a while, with gas closing yesterday at $3.538 per million British thermal units. That’s up almost 25 cents on the week.

“We are still wary of this market until a significant sell-off, possibly to $40, occurs,” said Fitzpatrick.

Source: Oil Moves Higher

“Fear is dominating the cyclical commodity markets today, as investors are concerned that the spreading of swine flu in Mexico may severely damp hopes of an economic recovery,” wrote analysts at Commerzbank.

However, “we consider these concerns premature and expect the oil price to move sideways, with some volatility between $45 and $55,” they added. “Given that oil market fundamentals are still weak, downside risks prevail at the moment.”

Edward Meir, of MF Global (NYSE:MF), concurred that, “The Mexican situation is resurrecting fears of the chilling impact that the SARS epidemic had on economic growth,” but also cited “nervousness about another batch of U.S. earnings reports and macro reports.”

Source: Oil Declines

Traders somehow managed to shrug off the grim jobless data and crude’s inventory glut, and focused more on the weakened dollar.

As Phil Flynn, of Alaron Trading, put it, “Oil continues to defy supply and demand.”

“The recent EIA numbers seem to be telling us that the OPEC cuts are not making the desired dents in overall crude oil inventories, as the drop in global demand seems to be outpacing the OPEC-engineered supply declines,” wrote Edward Meir, of MF Global (NYSE:MF).

“However, for the time being, the energy markets seem to be giving OPEC the benefit of the doubt, which is why prices are holding up around the $50 mark,” Meir added.

Source: Crude Creeps Higher

With the May contract losing front-month status today, there will likely be additional volatility in the market as speculators who don’t want physical oil have to sell the contract before expiration to avoid taking delivery.

Phil Flynn, of Alaron Trading, sees “more choppiness” as expiration approaches, however “if the stock market stabilizes, we’ll see the price of oil start to come up,” he said.

“Justifiably anxious over the global economy, now in the throes of the most serious economic calamity since the 1930s, [the energy market] attaches to the slightest glimmer of hope signs of a nascent recovery,” said Michael Fitzpatrick, of MF Global (NYSE:MF).

Analysts at Goldman Sachs (NYSE:GS) disagreed, writing that they expect oil prices to fall to $45 a barrel in the near term, “as lower prices will be required to shore up demand while keeping supply off the market.”

Source: Oil Plunges

Shane Wisdom, president of Wisdom Financial tried to puzzle out the market, saying that, “Traders seem to be focusing on somewhat more upbeat prospects of an economic recovery further down the road.

“However,” he added, “the news remains bearish, pointing to weaker demand and building supplies.”

“Justifiably anxious over the global economy, now in the throes of the most serious economic calamity since the 1930s, [the energy market] attaches to the slightest glimmer of hope signs of a nascent recovery,” said Michael Fitzpatrick, of MF Global (NYSE:MF).

“Certainly there are signs,”Fitzpatrick added, noting that Citigroup (NYSE:C) and GE results—bad, but not as bad as expected—“contain very hopeful elements, but are still in negative territory.”

And natgas continues to languish, with gas for May delivery falling 9.4 cents, or 2.5%, to $3.599 per million BTUs.

Source: Oil Inches Upward

Traders ran for cover after the International Energy Agency released a report saying that it is cutting its demand projection by 1 million barrels a day.

After its latest reconsideration, the IEA believes that global demand this year will now come in at 83.4 million barrels a day. That would be 2.4 million barrels a day below the 2008 level.

“The IEA report and lower stocks are pushing oil lower,” said Phil Flynn, of Alaron Trading. “It is hard for oil to continue to ignore evidence of weak demand when the stock market is floundering.”

And MF Global (NYSE:MF) analysts said that, “We do not expect the relationship between U.S. stocks and energy to end anytime soon.”

Source: Crude Drops Off

Nickel nosedived in the pre-dawn hours for the second straight day, tried to rally back but gave it up after noon, closing at $4.2547/lb., down 8 cents. Zinc bottomed at the New York open, but put in a spirited rally that kept it in the green despite some afternoon selling, as it ended at $0.5642/lb., up just over a tenth of a cent. Aluminum was modestly lower, dropping a third of a cent, to $0.6249/lb., while lead had a good day, tacking on a penny and a half, to $0.5803/lb.

Copper held up fairly well in the face of weak interest because of the dismal economic reports trickling in from around the globe.

For example, German business confidence slid to the lowest in more than 26 years this month, Munich’s Ifo institute said yesterday.

And Malaysia’s central bank said that that nation’s economy, Southeast Asia’s third-largest, is likely to undergo a “significant” contraction in this year’s first half.

“We still are not seeing more important evidence of demand picking up, which is why we think metals prices could head back lower,” said Edward Meir, of MF Global (NYSE:MF).

William O’Neill, of Logic Advisors in Upper Saddle River, New Jersey, was a bit more upbeat, saying that, “The combination of the durable goods and the housing report has been good for copper … We’re having a bit of rebound in market psychology now that we’ve seen some better economic data.”

And Tom Hartman, of Altavest Worldwide Trading in Mission Viejo, California, suggested that the “data are not a clear signal that economic recovery is already underway, but perhaps signal a bottom being laid out.”

In company news, Aluminum Corp. of China (NYSE:ACH)has won approval from Australia’s competition regulator, clearing a major hurdle for the Chinese state-controlled company’s proposed $19.5 billion investment in Rio Tinto (NYSE:RTP).

Source: Base Metals Mixed

Bloomberg reported that copper rose above $4,000 a metric ton [about $1.81/lb.] for the first time since November in London, gaining with other metals as a Federal Reserve plan to buy assets pulled the dollar lower and fanned speculation about an economic rebound.

“All markets are significantly higher, largely because of the impact of the Fed announcement last night, and the dollar is very weak,” Alex Heath, head of industrial metals trading at RBC Capital Markets in London, said yesterday.

Copper inventories in LME-monitored warehouses fell 0.3% to 493,450 metric tons, extending their decline since Feb. 25 to about 10%. Canceled warrants, or metal earmarked for delivery, fell 825 tons to 22,650 tons and now account for 4.6% of total inventories, down from 12% on March 4.

In technical terms, copper would have to close for two days above $3,840 a ton [about $1.74/lb.] for prices to move to about $4,190 [$1.90/lb.], the next so-called resistance level, Edward Meir, an analyst at MF Global (NYSE:MF) in Darien, Connecticut, wrote in a report.

“However, we would advise caution at these levels and would not be chasing the current bounce,” he wrote. “The market has done too much, too soon, given the still-daunting macro backdrop.”

The metal is unlikely to sustain its rally because the gain is based on expectations that the Fed plan will kick-start the U.S. economy, rather than any actual revival, said Robin Bhar, an analyst at Credit Agricole SA’s Calyon unit in London.

“It may well do, but I think we are talking months, not hours or days,” he said. “We are in completely unknown waters.”

Source: Base Metals Rally

Nickel also turned around after mid-morning, but failed to regain positive territory, closing at $4.4754/lb., down nearly 7½ cents. Zinc followed a similar path, ending at $0.5451/lb., down a half-cent. Aluminum added almost a penny and a quarter, to $0.6195/lb., while lead slumped, dropping nearly a half-cent, to $0.5962/lb.

Copper recouped its early losses and pushed well into the green after the Fed’s announcement generated some positive feelings.

“I think the fact that they are starting to buy long treasuries to push down long-term interest rates caused the (copper) market to react,” said Edward Meir, of MF Global (NYSE:MF).

“The Fed’s Treasury purchases will help copper on the demand side by helping to make money cheaper,” Meir added.

Action on the stockpile front continued to be slow. Inventories monitored by the LME rose by 625 metric tons yesterday, to 495,150 tons, anemic compared to recent changes that have routinely been in the thousands of tons.

Traders also had their eyes on China where, as Bloomberg reported, “the stock market rose to the highest in almost four weeks, led by Jiangxi Copper and other metal producers, on the expectation that higher commodity prices will help boost profits.

“ ‘Copper prices have stabilized,’ said Zhao Zifeng, a fund manager at China International Fund Management Co. in Shanghai, which manages the equivalent of $10.2 billion. ‘Investors are buying metal stocks as the state purchase has bolstered investors’ confidence that prices would be on an upward track.’

“Copper purchases by China to boost stockpiles may flip the global market from surplus into deficit this year, boosting prices already underpinned by stimulus spending, according to China International Capital Corp., the nation’s biggest investment bank.”

Source: Base Metals Mixed