Kitco Market Nuggets

Market Nuggets: OptionSellers' Gross: Comex Gold Boosted By Continuing Middle East Concerns

04 March 2011, 03:09 p.m.
By Kitco News
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(Kitco News) -- Middle East geopolitical concerns enabled gold futures to rise sharply Friday after a downward correction in the previous session, says Michael Gross, broker and futures analyst with OptionSellers.com. Violence continues in Libya, where oil production has been disrupted, and there are worries about protests in other nations in the region. “This is a volatile situation in the Middle East,” Gross says. “Gold is a flight-to-quality instrument when people get nervous. Nobody wants to be short on a Friday with what could happen over a weekend. So they’re buying back in and covering shorts.” Gross suggests gold might be “overbought” in the near term on the basis of technical-chart analysis. “But in situations like this, the technicals tend to get suspended to a certain extent.” He puts chart support for April gold at $1,395.70 an ounce and resistance at the $1,441 high from two days ago.

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

Market Nuggets: RBC: Rising Crude-Oil Prices Push Most Base Metals Lower

04 March 2011, 03:07 p.m.
By Kitco News
http://www.kitco.com/

(Kitco News) -- Most base metals were pressured Friday by worries about the impact of rising oil prices on the economy, says RBC Capital Markets. At the LME kerb close, copper, aluminum, zinc and nickel were all lower, although lead and tin managed gains. Also, in after-hours screen trading in New York, Comex copper is modestly weaker. “The base metals complex started the day well enough and non-farm payrolls came in basically at expectations,” RBC says, “but the market gave into concerns late in the day that crude-oil price hikes could outpace wage increases, which will have a dampening effect on demand for industrial commodities.”

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

Market Nuggets: Comex Gold Rallies, Then Runs Into Profit-Taking After Payrolls Data

04 March 2011, 09:07 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) -- (Kitco News) -- Comex gold drew support from the monthly U.S. employment report, although the market then ran into some profit-taking pressure, says Afshin Nabavi, head of trading at MKS Finance. February non-farm payrolls rose 192,000, toward the lower end of expectations after economists had been revising forecasts upward following strong ADP and weekly-jobless claims reports this week. “Gold rallied toward the $1,422 area, then profit-taking came in,” Nabavi says. “A lot of people were expecting higher numbers, anywhere from 200,000 to 300,000.” Had the jobs increase been more, it presumably would have further improved risk appetite for other markets.  As of 8:52 a.m. EST, April gold was $1.10 higher at $1,417.50 an ounce after peaking at $1,422.50 minutes after the data.

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

Market Nuggets: Barclays ‘Neutral’ On Precious Metals, Oil For Next Month Due To MENA Uncertainty

04 March 2011, 08:40 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) -- Barclays Capital, in a report in which its analysts rank the outlook for all of the commodities over the next month, says it is neutral on the commodity sector overall for the next few weeks, including the precious metals and crude oil. This is due to the uncertainty about how events will play out in the Middle East and North Africa (MENA) region, Barclays says. The escalation of political turmoil in the Middle East-North African region boosted oil and also triggered safe-haven buying in gold and silver during the past month, lifting prices significantly, Barclays points out. Should the MENA situation worsen, this likely would keep both metals supported. But if market concerns ease, then prices could fall back, Barclays says. “As with oil, our neutral positioning reflects the potential for an unusually high degree of price volatility over the next few weeks in response to the difficult-to-predict events in MENA,” Barclays says. In the case of oil, Barclays says it remains “positive” for the medium term, but expresses concern about the market’s tendency to “over-react” to both the upside and downside lately on news out of MENA.

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

Market Nuggets: Gold Could Retreat Further Before Rebounding – Gartman

04 March 2011, 08:24 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) -- Gold’s sharp break on Thursday after a “tepid” run to new highs earlier in the week could mean the yellow metal may retreat further, says Dennis Gartman, editor of The Gartman Report. Spot could “very, very easily” fall back to $1,340-$1,350 an ounce, trendline support, which it could test sometime in the next two or three weeks. “We’ll be buyers there. Until then, we’re on the sidelines, and we are comfortable there; happy there; watchful there!,” he says.

By Debbie Carslon of Kitco News; dcarlson@kitco.com

Market Nuggets: MF Global: Potential For Higher Energy Prices May Limit Upside In Base Metals

04 March 2011, 08:21 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) --There is potential for more strength in energy prices, says MF Global. “This suggests that we could see rather limited upside in (base) metals today, assuming the non-farm payroll number does not surprise,” says analyst Edward Meir. “More protests are scheduled in Bahrain for this weekend and rumblings out of Saudi Arabia are also making us somewhat nervous.” He cites news reports of around 100 Saudi Shi'ites protesting in the country's oil-producing Eastern Province Thursday, demanding the release of prisoners they say are being held without trial, in addition to "Day of Rage" protests have also been called for on Facebook and tentatively set March 11 and March 20.

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

Market Nuggets: Commerzbank: Any ECB Rate Hike Would Have Both Negative, Supportive Influences For Gold

04 March 2011, 08:10 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) --There would appear to be both bearish and bullish influences for gold should the European Central Bank hike interest rates, Commerzbank says. “Interest rate hikes are generally to be seen as negative for commodity prices in general and precious metals, in particular, as the opportunity costs for holding gold rise accordingly,” Commerzbank says. “However, prices should be supported by the weakening of the U.S. dollar versus the euro expected to result from this, as the U.S. Fed is still not making any moves to tighten its monetary policy.” European Central Bank President Jean-Claude Trichet said Thursday that an ECB rate hike next month is “possible” but not certain.

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