By Jon Nadler
The new month started off with more uncertainties still manifest in the global markets and with a further boost in the value of the US dollar as it received additional safe-haven bids from increasingly risk-averse global investors. Gold prices held up reasonably well in the overnight hours, trading largely near $1115 an ounce but still unable to overcome the $1125 resistance area. Other precious metals were showing mixed action during the wee hours. Most of the speculative excitement was still confined to, and visible in, the dollar/euro/sterling currency pits.

The Economic Times reported that gold buyers in India crossed their collective arms once again starting on Friday afternoon as domestic prices gained following a government imposed rise in precious metals import duties. Dealers surveyed by the ET were quoted as saying: "There were a few deals in the morning, but after the duty hike announcement, nothing has happened so far... We survive on thin margins and even a small hike could impact business," and “We have plenty of orders below $1,100 an ounce." – in so many words, “no dice on locals buying at this time.”

New York spot metals trading opened its first session of March with mixed results in terms of price. Gold fell by $2.20 per ounce basis spot bid, opening at $1115.70 as against an 81.05 print on the US dollar index (up a very robust 0.73). Silver CLIMBED 2 cents to start at $16.51 per ounce, while platinum gained $6 to open at $1547 and palladium rose $3 to the $434 level.

Rhodium showed no change at $2430 an ounce. Gold remains under pressure to perform and overtake resistance at $1125-$1131.50 lest the sellers once again prevail and possibly take the metal down to the $1090s. The dollar will call the shots once again this week, but gold may shine in euro and sterling terms this week, given the goings-on in the Old World.

While the European common currency remained relatively steady against the dollar (at or near 1.352 at last check) amid optimism that a life-preserver package for Greece may be in the making, the sterling slid to its lowest in more than nine months versus the greenback on the back of British election-related uncertainties. The most recent U.K. election polls indicate that the Tories’ lead over Labour is shrinking rather fast.

This emerging situation elevates the hazard of a “hung parliament” – an outcome that may impede much needed U.K. deficit-cutting measures. Some however see more than just election fog surrounding the sterling. Scottish money managers –according to Bloomberg- are expecting no less than a 20 or 30 percent decline in the pound as The U.K. catches the contagion and follows Greece down the slippery slope.

A couple of potentially supportive metals market news came into focus over the weekend. The first was the unfortunate and devastating earthquake in Chile. The 8.8-magnitude quake that has already killed more than 700 people was said to have damaged highways and airports, resulting in the closure of some copper mines. Estimated economic damage may reach the $30 billion figure, (nearly15% Chile’s GDP).

Speculators were quick to jump on copper and other metals trades in the wake of the news, despite the fact that analysts remain skeptical about the quake having any significant, long-term impact on the global market. In fact, several news reports indicate that operations in at least some of Chile’s copper mines are resuming immediately.

State-owned copper-mining company Codelco's El Teniente mine actually restarted operations on Sunday, and the Andina Mine was set to resume operations today or tomorrow. Therefore, “what the copper market is experiencing is more of a "sentiment reaction, rather than a fear that actual production levels will really be affected," said one analyst.

On the other hand, the second news item that came out over the weekend could potentially disrupt some mine output of metals in a place quite far from Chile. As of March 7th, some of South Africa’s biggest gold mines could be faced with an “indefinite” strike. This could take place unless miner Gold Fields Ltd. is able to settle a dispute over a fitness test (!) with the country’s biggest labour union. The NUM is threatening to cease work at all of the Gold Fields’ operations.

The latest indications from Germany are that European officials are likely devising a plan to grant Greece nearly $34 billion in aid if the need arises. However, on the concrete side of things, all that was heard this morning was European Union Monetary Affairs Commissioner Olli Rehn saying (following his meeting with the Greek Finance Minister) that “Greece must deepen measures to reduce its budget deficit.” We already know how locals have reacted to the measures that have hitherto been placed into action…  Continued...