(Kitco News) -Gold continues to rally as investors add new positions, says Triland Metals. The Federal Open Market Committee’s pledge this week to keep interest rates low for longer than the market previously expected has caused a “feeding frenzy in the gold market,” Triland says. Triland puts support around $1,715 to $1,720 an ounce. The next major resistance around $1,771, based on the 61.8% Fibonacci retracement from the all-time high to the December low. “Gold has now rallied $85 in three days with virtually no correction, but there will be one in the near future,” Triland says. Triland says silver continues to “eat away” at $33.75 to $34 resistance.  Around the time the Comex gold pit was closing, April gold was $6 higher at $1,735.90 an ounce and spot metal was up $12.70 to $1,732.30. March silver futures were nearly flat—down 0.18 cent to $33.725—while spot metal was up 30.9 cents to $33.70.

By Allen Sykora of Kitco News; asykora@kitco.com

(Kitco News) - Deutsche Bank says the recently strong base-metals “may be getting ahead of itself,” yet corrections could be limited. Industrial metals have been underpinned by supportive economic indicators in the U.S., ideas China will avoid a “hard landing” in its economy, short covering and stated intentions by the Federal Open Market Committee to keep U.S. interest rates at low levels until late 2014. “We expect that, once again, the market is getting ahead of itself, ignoring the seemingly obvious macro risks which remain, particularly Europe,” Deutsche Bank says. “However we expect that given investor confidence that monetary authorities remain firmly entrenched in the background to support the global financial system, a correction may be limited.”

By Allen Sykora of Kitco News; asykora@kitco.com

Market Nuggets:Deutsche Bank: South African Safety Stoppages Could Cut Into PGM Output

27 January 2012, 9:49 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) - Deutsche Bank says production of platinum group metals in South Africa could slip as companies keep working to increase safety. Longer term, the bank looks for persistent negative real interest rates to sustain the appeal of holding precious metals. For PGMs, Deutsche Bank points out that Amplats recently reported lower-than-expected fourth quarter production, reflecting a sharp increase in output disruptions due to safety stoppages. This reflects challenges for the PGM industry as a whole in South Africa as it adjusts to Section 54 rules and the government’s desire to eliminate mining-related deaths and injuries. Production in the country “could be significantly truncated,” Deutsche Bank says. “We believe that a long platinum/gold position is an attractive one given the current discount of platinum to the gold price.”

By Allen Sykora of Kitco News; asykora@kitco.com

Market Nuggets: BNP Paribas: Palladium May Be Due To Catch Up With Platinum Gains

27 January 2012, 8:45 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) -Palladium may be due to catch up with the recent gains in platinum, says BNP Paribas. Platinum has gained around 15% year to date, helped by a “risk-on” mode in most markets plus supply disruptions in South Africa. BNP Paribas cites the latest available data from the South African Department of Statistics showing that production of platinum group metals fell year on year between July and November. In November, PGM production was down by 15% YOY, following a 28% drop in October. Some of this has been the result of Section 54 safety stoppages. “Palladium has been underperforming platinum since the beginning of 2012, up by only 5% YTD,” BNP Paribas says. “At first sight, this can be explained by the fact that South Africa accounts for a smaller share of palladium-mine production relative to platinum, 40% versus 77%,” BNP says. Nevertheless, the bank reports, palladium is closer to being in a market balance than platinum, and little output growth is seen from other producer countries such as Russia, Canada and the U.S. “While ongoing safety related stoppages may reduce the platinum physical surplus, it would in our view first tilt palladium back to deficit. Given palladium’s recent underperformance, a performance catch-up relative to platinum may be due.”

By Allen Sykora of Kitco News; asykora@kitco.com

Market Nuggets: BBH: Indian Rupee Outperforms Among Emerging-Market Currencies

27 January 2012, 8:22 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) - The Indian rupee was an outperformer among emerging-market currencies Friday, rising 1.5% against the U.S. dollar, says Brown Brothers Harriman. Analysts cite several factors. “First, from a technical perspective, USD/INR finally made a clean break below the 50 level for the first time since last November. Second, flows into equity and bond markets have been very supportive during this period of risk appetite, and helped by prospects of rate cuts by the RBI (Reserve Bank of India),” BBH says. So far in 2012, foreigners have invested $1.56 billion in Indian equities and bought $3.39 billion worth of debt. “Lastly, a central bank source allegedly told Reuters that the RBI may intervene in the forward market in addition to its now regular spot interventions,” BBH says. “With all this in mind, it is clear to us that any sharp upwards move in USD/INR will be met by strong headwinds from officials, but we are not convinced that the currency will continue to outperform the region for much longer.” The performance of the rupee is monitored by metals traders, since it can influence demand for gold from a country that long has been one of the world’s largest consumers of the metal.  

By Allen Sykora of Kitco News; asykora@kitco.com

Market Nuggets: Gartman Returning To Gold/Euro, Still Holds Copper Position

27 January 2012, 8:09 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) - Investor and newsletter writer Dennis Gartman says he is buying gold in euro terms again after stepping to the sideline during the metal’s correction late last year. After consolidating its gains in recent weeks between 1,275 and 1,300 euros, gold has broken to the upside on the technical charts, he says in The Gartman Letter. Meanwhile, he remains long in copper, which has risen to $3.90 from $3.40 a pound this month. Gartman points out that drawdowns in London Metal Exchange copper inventories have reached their highest levels since May 2009 and that U.S. durable-goods orders reported Thursday were supportive for copper. However, he says, “for now, a quiet, consolidation seems in order.”

By Allen Sykora of Kitco News; asykora@kitco.com

Market Nuggets: UBS: Swift Rise In Gold After FOMC Reflects Previous Caution Among Investors

27 January 2012, 7:57 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) - The swift rise in gold after a dovish Federal Open Market Committee statement Wednesday shows how subdued investor positioning had been despite improvement in sentiment since the beginning of the year, says UBS. Previously, the market attitude in January was “cautious optimism,” UBS says. “Investors were reluctant to add to positions aggressively as memories of the disappointment in Q4 lingered,” UBS says. “A fresh catalyst was needed and we think the FOMC outcome on Wednesday fit the bill. More accommodative policy is a very good foundation for gold to build on the next move higher.” Some market participants will probably stay cautious, especially given how far gold already has advanced in the latter half of this week, UBS says. “But given the momentum and the fact that spec length is very clean, we think there is more room to the upside before the yellow metal faces a correction.”

By Allen Sykora of Kitco News; asykora@kitco.com

Market Nuggets: TD Securities Raises Gold Forecast, Looks For $2,150/Oz By Year-End

27 January 2012, 7:10 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) - TD Securities now looks for gold to “hit north of $2,150” an ounce later this year, particularly after this week’s “uber dovish” Federal Open Market Committee statement and a news conference by the Fed chairman signaled “easy money is here to stay for a long time.” TDS calls Wednesday’s rally of the FOMC meeting a preview for the rest of 2012. “As the Fed augments its stimulus, and if the economy continues to recover, investors will be increasingly worried that the U.S. central bank is behind the inflation curve,” TDS says. “Real interest rates should trend even lower, reducing opportunity costs of holding zero-yielding assets, and thus increasing demand for real assets such as commodities, particularly gold.” The continuation of the Fed’s so-called Operation Twist program will mean lower long-term real interest rates, as will a new round of quantitative easing later in the year, TDS says. Continued record-low interest rates will also undercut the dollar over the longer term, TDS adds. TDS has upped its 2012 gold forecast to $1,925 from $1,855 and its silver forecast to $38.50 from $36.45.

By Allen Sykora of Kitco News; asykora@kitco.com

Market Nuggets:TD Securities ‘Significantly More Upbeat’ On Commodities In First Quarter

27 January 2012, 7:10 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) - TD Securities says it is now “significantly more upbeat” about commodities in the current quarter. Analysts previously say they were negative for the early part of the year, fearing that developments related to Europe’s debt issues would trigger more “extreme risk aversion” in which investors swap risk assets for cash. “However, the market’s fairly steadfast response to bad news surrounding the Greek government-private bond holder deal last week and the Fed’s announcement that it will keep rates at record lows well into 2014 has convinced us that a Lehman Brothers-style pullback from risk assets and a liquidity crisis is unlikely,” TDS says. “With the various (and in many cases unlimited) ECB and Fed swap/credit lines available to financial institutions around the world, we judge that there are now enough financial shock absorbers present in the system to avert a financial-system crisis.” Meanwhile, TDS looks for another round of quantitative easing in the U.S. to go with ultra-easy monetary policy continuing into 2014. “This implies that the commodity party will last well into Q4-12, if not longer.” TDS says the commodities likely to do best are those with tight supply/demand fundamentals and needed by China. “On a risk-adjusted basis, gold seems to be the best over the short run. Palladium, platinum, copper and oil should do very well longer term.” TDS has upped its 2012 platinum forecast to $1,775 an ounce, palladium to $770 an ounce, copper to $3.99 a pound and West Texas Intermediate crude to $98 a barrel.

By Allen Sykora of Kitco News; asykora@kitco.com

Market Nuggets:HSBC: Further Safety Stoppages In South Africa Supportive For PGMs

27 January 2012, 7:10 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) - Any further safety-related production stoppages in South Africa are likely to be supportive for platinum group metals, says HSBC. Anglo Platinum reported a drop in refined platinum output in the fourth quarter, citing an increase to 32 safety-related stoppages, compared to 14 in the fourth quarter of 2010. For all of 2011, stoppages rose to 81 from 36 in 2010. Meanwhile, whereas Lonmin says it is likely to meet its sales guidance for the current year, the company also has experienced some production losses from safety-related shutdowns. “If PGM output continues to be clipped by more safety-related stoppages, underlying supply/demand balances are likely to tighten, in our view,” HSBC says. The bank later adds, “Taken in conjunction with higher auto demand this year, we believe this supports our view that PGM prices are likely to head up in 2012.”

By Allen Sykora of Kitco News; asykora@kitco.com