Silver again out-shined with a 3% gain, Palladium + 2%, while both Gold and Platinum traded 1.5% higher from the same time last week.
Trading hasn’t been without some trepidations, bullion traders once again closing positions into the weekend. Fridays have now become renowned for this mass exodus of risk. Gold sinking to six week lows, breaking below $1,170 per oz. before clawing back slightly into the close. Even a falling US dollar and generally poor US data didn’t support Friday’s metal prices. Recognising this trend allows us to identify opportunities and eliminate panic decisions. Monday saw safe-haven buyers back in the market after developments in the Middle East over the weekend and bargain hunters restore last week’s Gold losses. Though the recovery did pick up steam following last night’s US data miss, temporarily reaching key psychological $1,200 level, to currently settle just below at $1,195.
Fundamentals are slowly moving back in the favour of holding precious metals. Physical demand in Asia appears to be picking up again at the currently lower prices. While US data fails to deliver promised growth. Overnight, US trade deficit of $51.4 billion was much larger than the expected $41.2 billion and the worst reading since October 2008. This highlights the dollar’s strong headwind effect on US manufacturing, eroding the country’s global competitiveness. How long can the US dollar maintain present strength?
Looking ahead, most participants should remain cautious ahead of Friday’s blockbuster US non-farm payroll data, which is forecast at 231,000 in April, after an unusually weak reading of 126,000 in March. Following some soft US numbers and the central bank’s shift to a data-dependent stance of monetary policy, the data could provide clues on when the Federal Reserve will raise interest rates, and therefore the direction of precious metals dominate pricing factor, the US dollar.
By Adam Van Sambeek, Treasury Manager.