Daily Market Update 5/17/11

| May 17 2011

GOLD
Gold, with active trading, ended down $10.20, closing at $1,484.40 an ounce. Like yesterday, most of the news affecting the precious metal markets was the strength of the US Dollar and the weakness in Crude Oil and other commodities. Early in the trading session gold hit $1,471, but sizeable buying came in and moved the market higher.

It’s been reported that during the fourth quarter of 2010, Gold mining companies were continuing to cut hedging production. Hedging allows mining companies to sell future product of the metal by locking in prices for future markets. If spot metal prices rise above the hedged price, the company needs to make up the difference. The buying back of outstanding hedge positions was a key element in gold’s rally over the past decade.

SILVER
Silver closed at $33.96, down $0.30 per ounce for the day on average trading volume. It’s important to note that the trading range in Silver is narrowing. Today the highs & lows were $34.16 and $32.83, only a $1.33 range, while some of the indicators are turning positive. Hopefully, Silver is creating a base and will build on that base over the next month. At the current price, Silver is attractive and selling is limited, while buying is increasing. Global inflation is a catalyst for the market and concerns of European debt crisis have put that type of news on the back burner.

Today’s Other Important News

Global palladium demand hit a record high in 2010, enabling the market to post its first supply/demand deficit in a decade, Johnson Matthey reported Monday. Their “2011 Platinum” report said Palladium use last year rose 23% in 2010, to 9.63 million ounces, leaving the market in a deficit of 490,000 ounces. By contrast, the market had been in a surplus of 680,000 ounces in 2009. Johnson Matthey forecasts Platinum to average $1,870.00 and Palladium to average $825.00 over the next six months, noting strong fundamentals for their bullish outlook.

For many of my clients and friends who are Gold & Silver addicts, I am now also posting additional market news and developments on Twitter.