Gold could continue to be under pressure

Economic Background:

Europe

US

  • The housing starts for February rebounded 0.8 per cent, following a drop of 7.3 per cent the prior month.
  • The FED left policy rates unchanged, however its forecast for GDP saw a little change. The key numbers continue to be 6.5 per cent for unemployment and 2.5 per cent in terms of inflation expectations.
  • The Purchasing Managers Manufacturing flash Index was at 54.9 for March, 2013 in comparision to the final February reading of 54.3.
  • The existing home sales data for February 2013 rose 0.8 per cent to an annualised pace of 4.98 million units.
  • Jobless claims for the week ending March 16, 2013, were at 336,000, increased by 2,000 from last week.
  • The Bloomberg Consumer Comfort Index was at minus 33.9 in comparison to last week’s minus 31.6.

Japan

  • Bank of Japan’s Governor, Haruhiko Kuroda, stated at his first press conference that he would do whatever it takes to defeat deflation and achieve the 2 per cent price target as soon as possible.
  • India
  • The Indian Rupee finished the week at 54.339 to the US dollar.

Gold: $1609 – Up $17 from last week

The premium to Platinum is $28. The current ongoing deliberations in the Euro Zone with Cyprus taking the centre stage have definitely supported the yellow metal’s price movement on the upward.Gold continues to also get supported from the Federal Reserve Bank’s (FED) approach towards the quantitative easing programme and the key numbers continue to be 6.5 per cent for unemployment and 2.5 per cent for inflation.

Gold continues to also get supported from the Federal Reserve Bank’s (FED) approach towards the quantitative easing programme and the key numbers continue to be 6.5 per cent for unemployment and 2.5 per cent for inflation.
Japan’s re-iterating its commitment towards quantitative easing is also supportive of gold.

However, gold could continue to be under pressure by market participants on the short side and the break above two important price levels could turn the tide for gold moving northwards. Gold initially has to break above $1620 convincingly and to make another convincing move above $1710.

The coming week would continue to have Europe in centre stage, since an agreement on Cyprus has to be reached. Hence, one could believe that the market participants booked their profits in gold before the end of the week and would take clues in the coming week on their next move.

The latest Commitment of Traders Report (‘COTR’) (end of business day March 19, 2013), shows that the long positions have increased and short positions have decreased.

Silver: $28.75 – Unchanged from last week

Like previous week, Silver continued to draw inspiration from the industrial white precious metals. However as mentioned that its inability to stay above $29 is a matter of concern and $29.30 seems to be a very strong resistance point for silver.
The latest COTR (end of business day March 19, 2013), shows that the short positions have increased and long positions have not been impacted much.

Platinum: $1581 – down $6 from last week

The discount to gold is $28. Based on the current crisis faced by the Euro Zone over Cyprus, most of the industrial metals were sold during the first couple of days, which put immense price pressure on all the metals.

However, platinum was able to hold itself and move upwards from its strong support levels.

Further, on the mining side in South Africa, reports have emerged about centralised wage negotiations are going to start soon which could result in higher wages. The same could move the cost on the higher side for the producers, which could impact platinum production.

The latest COTR (end of business day March 19, 2013), shows that the short positions have increased and long positions have decreased.

Palladium: $759 – down $12 from last week.

As stated above that for the first couple of days during the week, when the industrial metals were sold, palladium also faced the brunt of it, whereby it broke important support levels and traded below it, however it did recoup and traded back above its key support areas. However, the key concerns on the supply side for palladium continues to be on the forefront where some reports suggest that Russia seems to be nearly finishing its stock piles, the same would support the price movements on the upward.

Further, even though the automobile sector in some of the regions have done well, one still has to take cognisance of the fact that the European automobile sector is still lagging behind, which could negatively impact the positive story for palladium prices.

The latest COTR (end of business day March 19, 2013), shows that the short positions have increased and long positions have decreased, but nothing very significant.

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