Gold News

Gold Up, Stocks Down with Dollar, as Gold Futures Signal Strong Demand

From Chris Mullen at GoldSeek.com...

Gold traded slightly higher in Asia and London on Wednesday, climbing 1% to almost $890 at the open in New York.

Gold Bullion then dipped, but climbed to a new session high of $892.97 in afternoon trade and ended near that high with a gain of 1.1% for the session.

The Gold Price in Euros rose to €685.

Silver climbed over $12.30 by late morning in New York before it also fell back. Silver then climbed back near its earlier high in the last hour of trade and ended with a gain of 2.2%.

Platinum gained $20 to $1170, and copper fell a few cents to about $2.06.

"Looking at the April '09 Comex Gold Futures contract and its spread between the June '09 contract," writes Dan Norcini at Jim Sinclair's JSMineset, "notice the narrowing of the spread between prices.

"It is a mere $0.60 from moving into backwardation [where nearby prices would exceed future prices] after having traded as wide as $6.50 at one point."

This it is not just an April/June phenomenon, Norcini goes on, "but rather one that is beginning to characterize the structure market of the Comex Gold contracts. The EXACT same thing has been occurring in the April 09/Dec 09 Comex gold spread, narrowing quite significantly.

Actual backwardation, says Norcini, "is a powerful signal of very strong demand, attempting to send a signal that the market needs more of a commodity to satisfy current buying."

Oil meantime rose Wednesday despite the fact that the International Monetary Fund (IMF) gave another grim economic forecast for global growth and crude-oil inventories in the US rose more than expected.

Crude stockpiles rose 3.9 million barrels last week, gasoline inventories rose 800,000 barrels, and distillates rose 2.7 million barrels.

The US Dollar index and Treasuries meantime fell, while the Dow, Nasdaq, and S&P held flat until the last few minutes of trade.

Gold Mining and silver equities rose about 2% by early afternoon, but they then fell back off into the close and ended near unchanged as the Dow sank to new lows at the close of play.

There were no major economic reports in the US, but the Mortgage Bankers Association reported that applications rose 5.3% last week.

Thursday at 08:30 EST brings Initial Jobless Claims for last week, expected at 639,000, and then at 10:00 is comes the Existing Home Sales report for March, expected at 4.65 million.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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