Tuesday June 12, 2012 3:47 PM

Comex gold posted sharp gains Tuesday, with analysts citing European issues and comments from a Federal Reserve official about U.S. monetary easing. "The rally was fueled by some short covering as well as speculation that the citizens of Greece will elect pro-bailout political candidates on Sunday…in hopes of saving the euro presence, or at least to buy some more time before they exit and have to reinsert the drachma," says Mike Daly, gold and silver specialist with PFGBEST. MKS Finance says gold rose on the back of the news that Fitch cut long-term issuer default ratings on 18 Spanish banks. Daly also cites comments from Chicago Fed Chairman Charles Evans, who says he would support a variety of measures to support growth. "Once again, anytime you have a FOMC Member mention stimulus, the market rallies," Daly says. As of 3:33 p.m. EDT, August gold was up $14.50, or 0.9%, to $1,611.30 an ounce.

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


Market Nuggets: Vision's Meger: Gold Performing Strongly Against Euro

Tuesday June 12, 2012 11:53 AM

While gold is back above $1,600 an ounce in dollar terms, the metal is also strong against the euro, says Dave Meger, director of metals trading at Vision Financial Markets. Considering European sovereign-debt issues, gold’s performance against the single European currency is important, he says. “If you expect there to be safe-haven buying in gold, you would expect it from (investors in) the European Union,” he says. “So it’s not surprising that gold in euro terms has been acting so well.” As of 11:41 a.m. EDT, gold was up 16.28 euros, or 1.3%, to 1,296.11 euros. The metal is off of the September peak in euro terms by around 5%, where it is off in dollar terms by around 16%.

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


Market Nuggets: Vision's Meger: Comex Gold Higher With Equities, Technical Momentum

Tuesday June 12, 2012 11:47 AM

Comex gold is stronger with equities and as the metal gains technical momentum now that it’s back above $1,600 an ounce, says Dave Meger, director of metals trading at Vision Financial Markets. As of 11:27 a.m. EDT, the August futures were up $16.20, or 1%, to $1,613 an ounce. While markets are still worried about Spain and its banking sector, the overall reaction to weekend news of a bank-rescue plan remains positive, he says. Recent price dips below $1,600 an ounce drew good buying interest in the physical market, he says. “We’ve seen some renewed interest on the physical side, and we do have a little momentum,” he says. This could carry gold to the $1,620-$1,640 area in the near term, he adds.

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


Market Nuggets: SEB Sees Potential For Short Covering In PGMs

Tuesday June 12, 2012 8:56 AM

SEB Commodity Research sees potential for short covering in platinum group metals. This would be buying to offset positions in which traders have already sold the market, or gone short. While speculators overall remain net long in these metals, the length has been pared in recent weeks as short positions were built. “With market conditions tight and set to tighten further in the medium term, the build-up in speculative shorts appears unsustainable, opening up for substantial short covering if sentiment reverses,” SEB says. “Automobile sector activity should be closely monitored for signs of strength or weakness in the current macro turbulence.”

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


Market Nuggets: SEB Commodity Research Looks For Gold To Take Out Early-2012 High

Tuesday June 12, 2012 8:52 AM

SEB Commodity Research anticipates gold will move to new highs for the year but is neutral longer term. While more widely discounted than its predecessors, a third round of U.S. quantitative easing could initiate a new gold uptrend, potentially a strong one, if it coincides with a further deterioration in the eurozone debt crisis, thereby supporting the dollar and boosting safe-haven demand at the same time, SEB says. “However, if gold continues to struggle under such conditions, we will probably have seen the end of the present gold bull market,” SEB says. “In our main scenario, we still expect gold to take out previous highs in 2012 though we think that there is a risk that gold has already peaked. Our long-term gold-market view remains neutral vs. current levels.”

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


Market Nuggets: SEB: Longer-Term Prospects For Industrial Metals Improved

Tuesday June 12, 2012 8:35 AM

The medium- to long-term prospects for industrial metals are improved now that they have given up their early-2012 rally and global authorities can be expected to try to prop up the economy, SEB Commodity Research. Analysts say they had considered the early-year gains to be premature. “While the short-term macroeconomic outlook is highly unstable and negative surprises appear to be the rule rather than the exception at present, medium- to long-term prospects for the industrial metals sector appear brighter,” SEB says. “Further efforts to stimulate the global economy are likely but their format, scale and timing remain uncertain. It is therefore difficult to say when industrial metals prices will bottom out.” Analysts say based on a cost-base perspective, nickel and aluminum probably have limited downside potential unless the current macroeconomic slowdown turns into a global recession, which is considers unlikely.

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


Market Nuggets: Gartman Describes Gold Market With Buying Of Cash Bullion But Selling Of 'Paper'

Tuesday June 12, 2012 8:17 AM

Investor and newsletter writer Dennis Gartman says he is bullish in gold now in U.S. dollar, euro and Japanese yen terms and currently is sitting tight during what he describes as a period of buying in the cash market but selling in the "paper" market. “The buying of bullion appears to be Chinese; the selling of ‘paper’ appears to be Western and perhaps bank oriented,” he says. “Our strong propensity shall always be to err on the side of those owning the ‘actual’ and to ‘fade’ those trading only ‘paper,’ following the great sportswriter Grantland Rice's admonition that 'the race doesn’t always go to the fastest nor the fight to the strongest, but that is the way to bet!'”

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


Market Nuggets: UBS: PGMs Appear Focused On European Issues More Than Fundamentals

Tuesday June 12, 2012 8:14 AM

Supply/demand fundamentals for platinum group metals appear to be having limited impact for now as the market focus remains on eurozone debt issues, says UBS. The recent news flow has opposing implications for PGMs, UBS says. There are concerns about softening auto demand, which means less PGMs used for catalysts, yet supply issues remain a supportive influence, such as news this week that Aquarius Platinum will mothball its Marikana operations. “The persistent question for PGMs though is how much do fundamentals really matter?” UBS says. “Not a lot, in our view, especially now with macro themes taking center stage. Ahead this week, markets are likely to move into wait-and-see mode in anticipation of the Greek elections over the coming weekend. The usually more illiquid PGM markets could see flows reduced further, which in turn would lend them more vulnerable to any negative headlines coming out of Europe.”

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


Market Nuggets: Commerzbank: Gold Behaving More Like Safe Haven Again

Tuesday June 12, 2012 7:55 AM

Gold is behaving more like a safe haven again, says Commerzbank. In a weak overall market environment, the metal remains just shy of $1,600 an ounce, the bank points out. Not only did Spanish 10-year yields rise Monday despite a rescue package for the country’s banks, but market participants worry that the eurozone debt crisis will widen, with Italy perhaps becoming the next focus. “The forthcoming elections in Greece this weekend are likewise not helping to calm the situation,” Commerzbank says. “In recent weeks, the sovereign-debt crisis, coupled with relatively low gold prices, has increasingly lured in investors. Fund provider ETF Securities, for instance, reports inflows into its gold ETFs for the third week in a row, bringing total inflows in the past three weeks to $503 million.”

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


Market Nuggets: TDS: Gold Gains May Be Limited Ahead Of Greek Elections But Rally Seen Later In Year

Tuesday June 12, 2012 7:37 AM

TD Securities figures gold may have trouble rallying significantly until after Greek elections this weekend but looks for a rise later in the year based on expectations for more monetary easing in the U.S. Ahead of elections in Greece, there is a perceived risk that the country may leave the eurozone if anti-bailout parties win. European finance ministers have discussed worst-case scenarios such as limiting the size of withdrawals from ATMs, imposing border checks and introducing capital controls. “Against this backdrop, we would not expect gold, copper or oil to move sustainably higher until the Greek election and the ensuing “politicing” is out of the way, and after we get some sort of clarity on the Spanish bank bailout,” TDS says. Analysts look for the metal to trade based on the most recent headlines and U.S. dollar moves. “We maintain a very positive view on gold longer term, $1,800/oz in Q4-2012, as we see more Fed accommodation and an ECB that will be eventually forced to backstop the European sovereign-debt problem,” TDS says. “As such, any downside move towards $1,500/oz due to the upcoming Greek election and Spanish bank bailout flux is seen as a buying opportunity.”

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


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