Daily Market Update 3/16/11

GOLD

Gold closed up $3.60 today, back above the important $1400 level at $1,401.20 per ounce. The markets were active today as bargain buyers, coming from outside the US, were very active. Gold under $1,400 looks very attractive considering the events in the Middle East and Japan.

Civil Protests and hostilities are still going on in Middle East countries. In addition to the civil war in Oil rich Libya, we are seeing the civilian population demonstrations in Bahrain, Yemen and Iran. However, with reduced consumption of crude oil from Japan, I doubt crude oil prices will increase from current levels.

The Federal Reserve’s Open Market Committee (FOMC) reported late yesterday that they decided to keep interest rates and a bond buying plan unchanged. The target range for the federal funds rate is currently at 0 to 1/4 percent. The FOMC stated economic recovery is on a firmer footing, and overall conditions in the labor market appear to be improving gradually.

SILVER
Silver closed today at $34.60 an ounce, up $.30 on the day.  With the high volatility in the precious metal markets and the recent substantial increase in prices, the silver market has held up surprisingly well. We could have easily seen a correction back to the $32 support area and we didn’t. A short base building period for silver in the $34 to $36 range would be very healthy for the long term.    

PLATINUM & PALLADIUM
Platinum and Palladium prices have fallen sharply in the past three days. The recent weakness has been exacerbated by fears of lower off-take resulting from industrial shutdowns in Japan on power concerns - the country’s three largest carmakers, Toyota, Nissan and Honda, have all shuttered some of their operations in recent days. Remember these metals are mainly used in auto catalytic converters.

Today’s Important News

U.S. wholesale prices jumped a seasonally adjusted 1.6% in February as food costs experienced the biggest one-month rise since 1974, the Labor Department reported today.

I’m currently in Sacramento, California at the American Numismatic Association’s National Money Show. This show is one of the largest rare coin and precious metal conventions of the year. I will give a full report on the status of the rare coin market on Monday.