Gold Breaks Above $1,115 Again

After doing so for a two-hour stretch yesterday, gold has made it above $1,115 this morning. The news that mainland China's Purchasing Managers' Index rose for the thirteenth straight month had little effect on the metal at the time of release.

In fact, gold spent the entire night in a trading range between $1,112.25 and $1,115. That range held up until just after 3:00 AM ET (despite a brief dip to $1,110.90 just after midnight) when it was broken through on the upside. That trading range gave way to a new one, between $1,115 and $1,117.75, with a spike up to $1,119.90 just before 5:30. As of 7:56 AM ET, spot gold was at $1,115.50 for a gain of $1.90 on the day. The Kitco Gold Index attributed +$3.00 to predominant buying and -$1.10 to strengthening of the greenback.

The U.S. Dollar Index went for a bit of a tumble between 7:00 and 8:30 PM,which climaxed at 80.8, but recovered from it to restore the 81 support level. An attempted rally between 1:55 and 3:00 took it slightly above 81.2, but that rally faded as well. Subsequently, the Index hovered around the 81 floor except for two jump-ups, the first a spike. As of 8:06 AM ET, it was at 81.14.

A Wall Street Journal article said that gold is rising in sympathy with platunum and other platinum-group metals (PGMs), but the rise has been muted.

Gold is attracting decent physical demand particularly from China, traders say, but investment demand remains muted. China's manufacturing activity grew for a 13th straight month in March and that boosted investor interest in industrial metals.

The same cause, plus a weakening dollar, were highlighted in a Bloomberg article webbed by Business Week. Also brought up was rising risk appetite in general.

“Equities are up and that indicates investors are buying more risky assets” including gold, said Peter Fertig, the owner of Quantitative Commodity Research Ltd. in Hainburg, Germany. Still, “the slight recovery in the euro may be a bit of profit taking,” and any dollar rebound may be negative for gold, he said.

In addition, the article mentions that holdings for the SPDR Gold Shares Trust (GLD) were unchanged yesterday.

On the other hand, a Reuters article attributed the rise to a jump in the commodities complex, particularly the PGMs like the WSJ article did. Noting that the greenback was almost unchanged, it quotes a metal analyst in support of the above contention:

"Commodities as a group are extremely strong at the moment," said RBS metals analyst Stephen Briggs. "We had lots of quarter-end massaging going on and that has set us up for probably more money coming into commodities at the begining of the second quarter," he said.

Also mentioned is the continuance of net physical demand in Asia but a relative dearth of investment demand, and the extent of the quarterly rise for the 1st quarter of this year: about 1%.

The jobless-claim report was released, which said that first-time claims fell by 6,000 last week to 439,000 seasonally adjusted. That number was slightly better than the expected 443,000. It had little effect on the greenback, but a big effect on gold. Despite dipping slightly right after regular trading opened, the metal turned upwards just before 8:30 and then paused at $1,116. Starting at 8:40, it leaped up well above $1,120 in a waterfall advance. As of 8:53 AM, the spot price was at $1,124.40 for a gain of $10.80 on the day. The Kitco Gold Index assigned +$10.95 to the predominant-buying category and -$0.15 to the strengthening-dollar category. The U.S. Dollar Index, on the other hand, merely sunk back to the sub-81.1 level; as of 8:55, it was at 81.08.

So far, this day's starting out like yesterday. Should gold hold at the level it's at just before 9 AM, it would make for a good holiday on the holiday weekend.