Market essentials /April 2009/
In April, the trends on the market of gold and other precious metals were determined by the optimism on the world stock exchange markets. Appearing reports on the results of the first quarter of the year (for many American companies this quarter is the end of the first half of the fiscal year) brought the surprises that had been hoped for. After changing the rules of financial accounting a number of American financial companies and banks demonstrated increased profitability of business, which was naturally reflected in the quotations and in the general trends of the stock market. Besides that, a serious impact was made by the Central Bank of EU, whose representatives made the decision to further liberalize the monetary policy in the conditions of continued recession and announced possible decrease of the discount rates to 1% annually. Combination of these factors supported US dollar which started to gradually strengthen and grew in April from the minimal levels of March by about 5%. Besides that, buyers returned into American bonds, wherefore gold as a natural hedge against weakening of US currency started loosing weight.
Further contribution was made by the consumers of the metal and by its major holders as a part of gold and currency reserve. The World Bank made a principal decision about sale of its gold assets (about 400 tons of metal), though the bankers promised not to make any sudden moves. India, being the second largest consumer of jewelry gold, in the first quarter of this year dramatically (several times) decreased its import. Excessive demand quickly found application in various hedge funds, however speculators failed to maintain decreasing gold prices. Though the decrease has not so far been significant, it affected other markets as well. In particular, silver prices precisely followed the dynamics of gold prices, despite the fact that it has different growth drivers. The only exception was that platinum prices somewhat deviated from the trends of other markets.
During the next month gradual decline of the European currency is possible, which will lead to preservation of the trend of decreasing prices of precious metals. We expect stabilization of gold prices at the level of $850/ounce, and silver prices – at $11.5/ounce. Platinum can slightly grow and get into the $1250-1300 window.
| Date | Au | Ag | Pt | Pl |
|---|---|---|---|---|
| 01.04.2009 | 1001.18 | 14.3 | 1226.26 | 233.26 |
| 07.04.2009 | 938.06 | 13.72 | 1229.76 | 237.85 |
| 11.04.2009 | 952.05 | 13.3 | 1292.1 | 254.1 |
| 17.04.2009 | 955.16 | 13.9 | 1308.65 | 254.64 |
| 23.04.2009 | 969.11 | 13.29 | 1269.16 | 246.38 |
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