Morning Market Update: Jan 9

January 9th, 2013 by

Gold and silver both continue to trade in a tight range around their 200 DMA (200-day moving average,)  as lack of major economic news this week leaves them with no clear direction. Asian markets were mostly quiet overnight, while European equities received a little support on positive revenue news from aluminum giant Alcoa. Their earnings report also has U.S. equities opening in positive territory, and the dollar strengthening.  These two factors are acting as limiters on the price of gold and silver this morning.

Looking ahead, the European markets are anticipating tomorrow’s ECB meeting, as well as upcoming Spanish and Italian bond auctions as a barometer to the economic health of the second tier Euro countries.

Analysts expect continued strong physical demand for gold in Asia. “Increased physical buying interest in Asia ahead of the expected hike in gold import duties in India and in the run-up to the Chinese New Year festival is bolstering the price rise,” Commerzbank says. HSBC’s consumer research analysts say Hong Kong jewelers are optimistic about a rebound in first-quarter sales growth due to a recovery in consumer confidence. Natixis analyst Nic Brown says  “We find ourselves just ahead of Chinese New Year, which seasonally is one of the strongest times of the year for gold demand, and seven weeks away from the new deadline in the U.S. political system, and we’re surprised at how low gold prices are.”

One metal besides silver that has potential as both a safe haven and as a beneficiary from economic growth is platinum. CME Group notes: “Platinum prices have posted strong gains for the second straight session and in the process, April platinum has reached up to the highest price levels since December 20th. Platinum might be finding some measure of support from favorable Alcoa earnings results, as well as from generally positive global equity market action. Some traders are suggesting that platinum might be the most responsive precious metals market to a modest improvement in the global economy, as recent platinum deficit readings could mean that a slight increase in demand could lead to a much larger platinum supply deficit.”

by David Peterson