Markets are calling it a positive day for gold. Some headlines read “Gold marks second straight session of gains: but in fact gold did absolutely nothing. It simply meandered from here to there with no direction at all on Tuesday and is doing the same this morning. Gold is trading at 1294.40 after opening at 1293.80 in the morning, so it was technically an up day. Precious metals were holding ground within a tight trading range as traders looked to speeches this week from various Federal Reserve officials for clues on the metal’s next direction. Two Federal Reserve officials give speeches today—Philadelphia Fed president Plosser and New York Fed president Dudley. Traders are awaiting Wednesday afternoon’s release of the minutes from the latest Federal Reserve Open Market Committee (FOMC) meeting.
There was virtually no data on Tuesday and little in the way of speeches of merit. German producer prices fell 0.1% in April and were down 0.9% year-on-year, it was reported Tuesday. The readings were lower than expected and add yet more concern of deflationary price pressures gripping the European Union. The data is another clue that the European Central Bank will move to further ease its monetary policy in June.
The Russia-Ukraine crisis has not gone away, but there has been no major, fresh news from the region in a couple weeks. The Ukraine holds a presidential election on Sunday. Traders have grown bored with the news and the situation.
The World Gold Council reported that demand for gold bars and coins dropped by 39% in the first quarter of this year, compared with the same time last year. India is the major reason for the drop, said the WGC, mainly due to government restrictions on gold imports. While Chinese imports also tumbled. The mainland’s demand for gold fell 18 per cent in the first quarter of the year as investors bought fewer bars and coins, offsetting record interest in jewelry, the World Gold Council said. Purchases declined to 263.2 tonnes, the London-based council said yesterday. While jewelry consumption rose 10 per cent, demand for bars and coins sank 55 per cent, accounting for about 40 per cent of the global decrease.
Silver took its cues from precious metals but bounced a bit higher as traders took advantage of the low prices to buy up the shiny white metal. Silver is trading at 19.478 on Wednesday morning. Copper on the other hand traded in the red as traders booked profits after copper touched a record high earlier in the week. Copper still remains well above its trading range at 3.134. Chilean market experts surveyed by the Chilean Copper Commission have cut their outlook for the 2014 copper price to $3.07, down 7 cents from the last survey released in October, Cochilco said Tuesday. Chile is the world’s largest copper producer and forecast to produce 6 million mt this year. The Cochilco survey comes a day after Chilean Finance Minister Alberto Arenas said the government had cut its copper price forecast to $3.05, from $3.25 predicted in September.