Monday, 11 Apr 2011

Gold, Silver, and Crude Oil Prices Drop Sharply

The prices of spot gold and spot crude oil fell from their previous yearly highs as the dollar made up slight ground versus the majors.

A lack of economic data on the calendar and the last minute compromise between Democrats and Republicans over the US budget allowed for the greenback to make up some lost ground versus the majors.

The strengthening dollar combined with concerns that a prolonged increase in crude oil prices will weigh on global growth had traders scaling back long positions in spot crude oil. A report by the IMF showed the agency expects global growth to slow this year to 4.4%.

Near the end of the trading session, spot crude oil prices were down at $109.37, off of this year's high of $113.15. Metals were also off of their highs. Spot gold was down at $1,462 from $1,476. Spot silver was lower at $40.10 after marking a new high just below $42. Silver opened the week trading at $41.50.

FOMC member Janet Yellen said price increases of highly volatile goods such as food and fuel will not force the Fed to tighten monetary policy or scale back QE II.

After a day with little to speak of on the economic calendar, tomorrow will be full of events. During the European trading session British CPI data for last year will be released. Traders have high expectations as this piece should be one influencer on the BOE for its upcoming monetary policy meeting in May. In the US trading session, traders will be eyeing the Bank of Canada. The BOC is not expected to adjust rates but traders will be looking for changes to the accompanying statement that hint at future interest rate increases.