Morning Gold & Silver Market Report – 3/20/2012

COULD OIL PRICE HIKES PAVE WAY FOR GOLD TO FOLLOW?  

U.S. stock futures and commodities (including precious metals) across the board are trading lower this morning. Peter Cardillo of Rockwell Global Capital said, “I think it’s just a normal pullback on weaker commodity prices due after a long run-up (in stocks). Housing data could cushion a U.S. decline, but stocks are likely to take a breather for a day or two.” Cardillo said he also expects more upside in stocks as investors switch to riskier assets such as equities.

The housing data isn’t likely to cushion the fall of U.S. stocks today. The Commerce Department reported that housing starts for February fell 1.1 percent, after it revised January’s numbers slightly upward. Analysts expected a rise in housing starts, but the main increase came in permits for new construction, which typically is seen as a gauge of future demand. Housing data is viewed as a key indicator of a country’s economic condition. Precious metals prices were largely unaffected by the news.

Historically, the Gold price has held a mostly positive correlation with oil prices. Oil prices have been on the rise lately amid tensions between Iran and the West, and the chief executive of Shell said he believes that trend will continue. Peter Voser said, “Longer term, you will see demand rising and … in the very long term, we will see prices going up because of high demand and as it gets more expensive to get the resources out of the ground.” He warns that higher commodity prices could hamper the economic outlook, which is something important to monitor.

At 8 a.m. (CDT), the APMEX precious metals spot prices were:

• Gold - $1,647.90 – Down $20.70.
• Silver - $32.24 – Down $0.76.
• Platinum - $1,661.50 – Down $24.20.
• Palladium - $697.60 – Down $10.00.