Precious Metals

The precious metals suffered mixed fates on Friday as gold and platinum posted gains, while silver prices tumbled. Gold rose steadily throughout early trading, but dropped to an intraday low below $920/oz. during the NYMEX session. Prices for the metal recovered, however, to finish the day at $928.40/oz., up $1.70 on the day. For the week, gold was down 2.7%.

Platinum had a banner day as the metal traded up in the Far East before dipping mid-morning. A late rally during trading in New York brought the metal sharply up for the day, closing up $45 at $1740/oz. For the week, platinum was the worst performer among the precious metals, down 5.4%.

Falling silver was the lone blemish Friday for the precious metals. Silver started the day strong peaking near the end of the Hong Kong session but couldn’t maintain its momentum, dipping badly during NYMEX trading to end at $17.34/oz., down $0.07. Silver was down 4.4% for the week.
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Gold’s modest rise came despite opposition from dropping crude prices. The metal’s gains were fueled instead by signs that the dollar may again be weakening against the euro, raising the appeal of the metal as a hedge against inflation.

"The rally in the dollar came to an abrupt halt yesterday and we suspect we will see the euro back toward the top of its recent range in the next couple of weeks,'' John Reade of UBS wrote. ``Gold will trade higher over the next three months."

This raised hopes among gold bugs that gold will resume its upward movement.

"We're never going to see $850 again or be this close to it, so now is the time to buy," proclaimed James Turk, the founder of Goldmoney.com. While Turk clearly has a vested interest in higher gold prices (his company holds $387 million in gold and silver), if the dollar continues to weaken, he may be right.

Platinum’s huge gains on the day snapped its longest losing streak in ten years. It rose largely on the belief that the current weak prices will cause increased demand in China, which consumes 49% of all platinum used in jewelry.

“With strong appetite for platinum from China at current prices, platinum can bounce sharply,” Reade stated. “We continue to recommend that investors that wish to buy a lot of platinum add to holdings here, although we hold off from initiating a high-conviction buy recommendation in platinum for now -- but perhaps not for much longer.”