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Gold Hits New Euro Record, Beaten by Silver, as Precious Metals Signal "Global Recovery"

Commodities / Gold and Silver 2010 Apr 06, 2010 - 07:42 AM GMT

By: Adrian_Ash


THE PRICE OF GOLD bounced from last week's closing price against the US Dollar on Tuesday, rising as London dealers returned to work from the long Easter weekend and breaking new all-time highs against the Euro.

Asian and European stock markets also rose, as did the Dollar, which gained against everything except Australian currency after the Reserve Bank of Australia raised its key interest rate for the fifth time in six meetings.

"We don't see too much selling [in gold] but I guess the price has gone up too fast this morning when the liquidity was small," one bullion dealer in Tokyo told Reuters overnight.

"We've also seen some buying from the industrial sector in Japan but there are no inquiries from overseas buyers."

"Our strongest conviction is for a rebound of auto-related platinum-group metals demand as worldwide vehicle production rises, forcing a restocking of the metals inventories run down in 2009," reckons former Mitsui analyst Edel Tully, now chief metals strategist at Swiss bank UBS's London office.

Tully believes that platinum and palladium, which rely far more than gold on industrial demand, will outperform gold as the global economy recovers further.

The ratio of gold to platinum and palladium prices has fallen to the lowest level since Lehman Bros. collapsed in Sept. 2008, Bloomberg News notes, calling it "a sign that the global economic recovery may be gaining momentum."

"Good economic numbers should be quite positive purely for the supply-demand forecast for catalytic converters, so the economic updraft is there," agrees Jonathan Barratt of Commodity Broking Services in Sydney.

Platinum and palladium prices dropped by almost two-thirds as the global financial crisis bit.

Priced in Dollars, gold lost 33% from its 2008 top.

"[The silver price] has broken through topside downtrend resistance off its December high," says the latest technical analysis from market-makers Scotia Mocatta, meantime.

"The breach of this level [at $17.89 an ounce] makes possible another aim at the $18.90 2010 high in the metal."

The Gold/Silver Ratio – taken as a measure of bullishness towards precious metals in general, but particularly the industrially-useful metals – "continues to decline," says Scotia, meaning silver prices have been rising faster than gold.

US Treasury bonds meanwhile bounced today from Monday's sell-of, pushing the yield offered by 10-year notes back below yesterday's 10-month highs around 4.00%.

Crude oil held near new 18-month highs above $87 per barrel, while copper traded in London caught up with Friday's stronger-than-expected US jobs data by hitting a 20-month high.

One third of last month's 162,000 new jobs came thanks to the US Census, due to finish in July.

Today the gold price in Euros broke above €840 an ounce for the first time ever as the single currency fell hard on fresh doubts over the Eurozone's plan for avoiding a Greek default.

Converted into the old German Deutsche Mark, this morning's London AM Gold Fix was almost 15% above the pre-Euro peak of DM 46,530 per kilo, reached on 21st Jan. 1980.

Thursday this week will bring interest-rate decisions from the European Central Bank as well as the Bank of England. Neither is expected to make any change to their record-low interest rates.

Today the Labour government in London called a UK general election for May 6th.

By Adrian Ash

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
Formerly City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2010

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