Gold Set For Sixth Consecutive Quarterly Advance on Physical Demand?

Published in Market Updates  Precious Metals Update  on 31 March 2010

By Michael O’Brien


Gold
Gold fell to $1,101/oz in New York before recovering to close with a loss of 0.53%. It has since risen from $1,105/oz to $1,110/oz in Asian trading this morning. Gold is currently trading at $1,109/oz and in euro and GBP terms, gold is trading at €825/oz and £732/oz respectively. Gold looks set for a lower close for the month of March (some 1%) but a higher close for the quarter (see chart).

Gold’s rise this morning is likely due to dollar weakness and oil, copper and some of the other commodities remaining firm. Global steel prices are set to soar after yesterday’s iron ore pricing deal and this will contribute to increasing inflation and more inflation hedging buying of gold.

The eurozone debt problems have not gone away and Greek sovereign bonds suffered a sharp sell-off yesterday as investor concerns over the country’s financial health flared up again. The US is not immune to the debt crisis as California, New York, Illinois and other US states are showing many of the same signs of debt overload that has taken Greece close to bankruptcy.

Continuing geopolitical tensions with Iran with President Obama seeking tougher sanctions against Iran may have also have contributed to gold’s rise. Physical demand remains robust internationally as seen in healthy premiums in Turkey, Vietnam, India and China.

Gold looks set for its sixth quarterly advance which is important from a medium and long term technical point of view and shows that gold’s medium term trend remains up and in a bull market. The macroeconomic conditions and the uncertain outlook of today should see gold continue to act as a safe haven for the foreseeable future.

Silver
Silver rose sharply from $17.30/oz to $17.54/oz this morning in Asia. The gold:silver ratio continues to look very favourable for silver and looks like silver might be on the verge of breaking out. Silver is currently trading at $17.50/oz, €13.01/oz and £11.55/oz.

Platinum Group Metals
Platinum is trading at $1,644/oz and palladium is currently trading at $479/oz. Rhodium is at $2,575/oz.

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