Daily Market Update 5/10/11

GOLD
Gold was up $9.80 for the day, closing at $1,515.60 on active trading. After the recent correction in Gold from the high of $1,577 to the intra-day low of $1,462, it’s important that Gold build the base in the $1,500 to $1,525 price range. Although Silver took the wind out of Gold’s sails last week, the long term picture continues to look solid with $1,800 by year end as my target.

In addition to reports of heavy Indian gold buying, this morning we are seeing new buyers coming into the market concerned about global wage and price inflation. The potential impact of US flooding and cold weather on spring planting season within our borders could cause more food inflation later this year, too. Bargain hunting and risk aversion due to the Euro Zone crisis is also supporting the gold prices. Remember, the past 3-day rally in gold is in the face of a stronger dollar, up to $1.43 from $1.49 against the euro.

SILVER
Silver closed today at $38.58, up $1.14 for the day and showing some resistances at the $39.00 area. Volume was good and carryover demand from Asia was very supportive. Comex Silver Stocks are currently at 102,095 million ounces up 80,262 yesterday. Finally we see an up day in inventories after seeing a decline in 14 of the last 20 days. Today, Silver showed technical resistance at $39.00 and support at $37.97. Silver’s recent weakness was reflected in the most recent U.S. Commodity Futures Trading Commission (CFTC) data. Net speculative length now stands at 4,678 tonnes - the lowest level since February 2010. Speculative longs fell by 123.6 tonnes, while short positions increased by 138.7 tonnes. The professionals are definitely shaking out the little guy.

Today’s Other Important News
China’s trade balance rebounded strongly in April as exports surged and imports came in lower than expected, according to figures released by Beijing today. The trade surplus hit $11.4bn in April, far larger than most analysts expected and well above the surplus of $140m in March.

For many of my clients and friends who are Gold & Silver addicts, I am now posting on Twitter multiple times during the day and night.