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«  March 2011  »

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Main » 2011 » March » 15 » Gold, Silver, PGMs Down On Flight To Cash
6:05 PM
Gold, Silver, PGMs Down On Flight To Cash

Gold, Silver, PGMs Down On Flight To Cash

By James Campbell

SINGAPORE -- Gold, silver and platinum group metals were all lower in Asia Tuesday, after the escalating Japan nuclear crisis precipitated steep losses in Japanese equities, pushing Asian investors to move into cash.

It was shades of 2008 for the gold market, with the U.S. dollar, the Japanese yen and the Swiss franc appreciating as investors sought liquidity.

News of a fire at Tokyo Electric Power's No. 4 reactor at the Fukushima Daiichi plant in northeastern Japan was the main driver of the selling amid reports of radiation leakage.

This sent the Nikkei-225 equity index down 14.4% at one point before recovering some ground to close down 11% at 8,605.15, while regional equity markets were also mostly lower.

"It was the Nikkei dive pushing the dollar up and gold just got caught," said a Sydney-based trader.

Crude oil was not helping gold either, falling as demand destruction and shuttered refining capacity due to the Japan earthquake outweighed any concerns over the still-tense political situation in the Middle East.

At 0550 GMT Nymex April crude was at $99.50 a barrel, down $1.66.

Spot gold was at $1,414.80/oz, down $14 since the New York close. On Tocom February 2012 gold was at Y3,719 a gram, down Y52.

Apart from Japan and the Middle East, the gold market will be watching the result of a one-day U.S. Federal Reserve meeting due at 1815 GMT.

Should the Fed take a more optimistic tone on the U.S. economy, it could be negative for gold, although the recent strength in oil and the Japan situation may keep its statement cautious.

Spot silver was at $35.18/oz, down 76 cents, while platinum and palladium were again suffering liquidation due to the Japan situation.

Spot platinum was at $1728/oz, down $27, and spot palladium was at $728/oz, down $16, also hurt by indications China might tighten monetary policy further after its central bank raised the yield on one-year bills by 20 bps after keeping it flat over the past four weeks.

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