Fed Chairman Bernanke’s speech

Commodities rallied yesterday on Fed Chairman Bernanke’s speech in which he said accommodative monetary policy is still needed to spur employment. Traders quickly interpreted this as the resurrection of QE3 thus ending speculation of higher interest rates by year end, as suggested by some economists. We believe that Bernanke might be taking a page out of Former Chairman Greenspan’s play book by talking down short term interest. The problem with the Greenspan’s approach is that Bernanke lacks the Wall Street credibility so he won’t get the desired effects as when Greenspan “talked” up the dollar. Our research suggests that QE3 is probably not on the horizon unless economic data worsens significantly in the US or around the world. The S&P Case Shiller home price data this morning didn’t give us any new insight about the slowly recovering US housing market. The commodities and equities will most likely move higher in the short term as markets await more data to confirm the global economic health. We would be cautiously long in gold and silver ahead of the quarter end and hold a flat position in the industrial metals due to headline economic risks out of China and Europe.

Metals	Last	%Change	Low	High
Au- Jun	1695.2	0.41%	1686.5	1698.6
Pt-Jul	1665.7	0.91%	1652.0	1671.8
Pd-Jun	668.05	-0.15%	666.00	674.05
Ag-May	32.990	0.73%	32.725	33.190
London	AM	PM	Minor	PGMs
Au	1694	-	Rh	1450
Pt	1661	1662	Ru	120
Pd	669	667	Ir	1100
Ag	33.01	DJI	13241.63	160.9
Currencies
	USD	EUR	JPY	GBP
USD	0	1.3342	0.012024	1.5986
EUR	0.7494	0	0.90118	1.1981
JPY	83.16	110.96	0	132.945
GBP	0.6256	0.83467	0.7522	0
Crude Brent	125.62	Comex Copper	388.8
Crude WTI	107.24	Nat Gas	2.196
*THESE PRICES ARE FOR INDICATION ONLY CALL FOR QUOTES

US dollar is trading weaker against the Euro

US dollar is trading weaker against the Euro as new home sales slipped 1.6% in Feb and Jan figure was revised from down 0.9% to down 5.4%. Despite the drop in sales, new home prices increase to their highest level in 8 months which keeps the notion of the housing recovery alive. Precious metals sold off yesterday due to persistent worry about Chinese economic slowdown and the slow pace of the European economic recovery. We are seeing a partial recovery in the metals today on the weaker dollar and the weaker than expected US housing data. With each weaker than expected data, traders are still hoping for QE3 and accommodating global liquidity and low interest rates. Crude prices are higher on geopolitical risk in the Middle East with Iran and a possibility of Israeli attack on the Iranian nuclear installations. Market also does not believe that Saudi Arabia would be able to pick up the production drop off vacated by Iran. As we predicted, the selloff in gold and silver was met with fresh buying. We would be cautiously long in gold and silver ahead of the weekend. Keep an eye out for quarter end related window dressing and fund rebalancing next week in the commodities.

Metals	Last	%Change	Low	High
Au- Apr	1663.1	1.25%	1641.5	1666.3
Pt-Apr	1631.3	1.22%	1613.5	1638.5
Pd-Jun	663.4	1.90%	653.00	664.90
Ag-May	32.050	2.27%	31.435	32.165
London	AM	PM	Minor	PGMs
Au	1651	1664	Rh	1525
Pt	1625	1617	Ru	130
Pd	654	658	Ir	1100
Ag	31.54	DJI	13059.8	13.66
Currencies
	USD	EUR	JPY	GBP
USD	0	1.3275	0.012172	1.588
EUR	0.7532	0	0.91688	1.1962
JPY	82.16	109.07	0	130.461
GBP	0.6297	0.83598	0.7665	0
Crude Brent	125.21	Comex Copper	381.25
Crude WTI	107.01	Nat Gas	2.319
*THESE PRICES ARE FOR INDICATION ONLY CALL FOR QUOTES

Another quiet trading morning with precious metals

Another quiet trading morning with precious metals locked into the comfortable trading range. Commodities sold off yesterday on China raising fuel prices and concerns about the potential slowdown there. Traders will be listening closely to US Fed Chairman Bernanke and Treasury Secretary Geithner’s testimony with the House Committee on Oversight and Government Reform, regarding European debt crisis and US exposure to it. Markets will try to find any clues to potential QE3 or the lack of one in the testimony. Despite a mild recovery of the US housing and labor markets, China and Europe will continue to dominate headlines. Any spread of European financial crisis beyond Greece, deteriorating economic news out of China, and any worsening in US economic data would deliver serious blows to equity markets, crude prices, and industrial metals. We reiterate our position to buy gold and silver on any significant sell off and sell platinum and palladium above $1725 and $725 respectively. We are still concerned about the global economic recovery and the slow winding of the loose monetary policies worldwide. We would trade the precious metals within the trading ranges and closely monitor headline news.

Metals	Last	%Change	Low	High
Au- Apr	1659.5	0.77%	1646.3	1661.9
Pt-Apr	1644.2	-0.62%	1635.5	1664.5
Pd-Jun	695.7	-0.14%	683.80	701.30
Ag-May	32.325	1.54%	31.865	32.410
London	AM	PM	Minor	PGMs
Au	1656	-	Rh	1525
Pt	1654	1640	Ru	130
Pd	696	690	Ir	1100
Ag	31.97	DJI	13155.5	-14.69
Currencies
	USD	EUR	JPY	GBP
USD	0	1.3249	0.011941	1.5852
EUR	0.7548	0	0.90123	1.1965
JPY	83.75	110.95	0	132.749
GBP	0.6309	0.83579	0.7533	0
Crude Brent	124.27	Comex Copper	385.65
Crude WTI	106.41	Nat Gas	2.328
*THESE PRICES ARE FOR INDICATION ONLY CALL FOR QUOTES