Morning Market Update February 4

February 4th, 2013 by

Gold and silver saw a decline in European trading this morning, as both the U.S. and Euro stock markets retreated from recent highs.  Platinum and especially palladium gained on the back of encouraging U.S. auto sales. Uncertainty in the Eurozone over allegations of corruption involving the Spanish prime minister, and a banking probe in Italy sent both nation’s bond yields higher. Germany is balking at a bailout for Cyprus, lending further uncertainty. This turmoil has helped bring the euro lower, which was already seeing some profit taking after it’s robust gains last week.

The dollar is higher on short covering and the drop in the euro, after hitting 4.5 month lows last week. On the flip side, oil is a bit lower on profit taking after hitting 4.5 month highs last week.  The stronger dollar and weaker crude oil are having a dampening effect on gold, but physical demand out of China ahead of the Lunar New Year on February 9 is limiting the downside.

Platinum hit a 4 month high in early trading, while palladium hit a 17 month high on expectations of increased auto sales and economic recovery in the U.S. and China. Platinum got a lift from Anglo American Platinum, the world’s largest platinum miner, reporting an operating loss for 2012 of $715 million as a result of South African labor strikes and riots that cut platinum production 305,600 ounces.

Gold and silver continue to trade in a tight range, with no major influences to establish a trend either higher or lower. Economic data out of China or the U.S. may provide some steering later this week.

by David Peterson