Steel Trading Soar LME, Gold Future Retreat in NYME 2011

Steel commodity trading soar by nearly six-times during the first two months of 2011 on the same year-ago period, the London Metal Exchange (LME) said Thursday. The LME said 42,300 lots were traded in January and February 2011, compared with 6,470 lots in the corresponding period a year earlier. The average settlement price for steel billets in February was $539.48, the LME said.

Gold futures retreated more than 1% Thursday, giving back the previous session?s paltry gains and then some as the dollar traded higher and other commodities such as oil headed lower.

Gold for April delivery /quotes/comstock/21e!f:gc\j11 (GCJ11 1,412, -17.60, -1.23%) retreated $17.10, or 1.2%, to $1,412.50 an ounce on the Comex division of the New York Mercantile Exchange.

Prices in electronic trading turned higher, however, after reports of clashes between police and demonstrators in Saudi Arabia on the eve of planned protests calling for democratic reforms in the world?s top oil-exporting country.

Silver retreated from a 31-year high, and copper succumbed to downward pressure after spending some time in the black.

Earlier Thursday, investors grappled with news that China posted a $7.3 billion trade deficit for February, while markets had expected a surplus. Read more about China's deficit.

?It?s the long-awaited turn in global growth, which takes risk off the table. There?s the possibility that the China story has peaked, which in general is bearish for gold,? said James Cordier, president and head trader at Liberty Trading Group in Florida.

?Finally we?re seeing legitimate signs that China is [slowing]: the first trade deficit in years, China?s need and consumption of copper is almost nonexistent, car sales are down dramatically, and if China is not exporting, they are in trouble, a warning that growth is slowing,? he added.

Providing some support for gold, concerns about euro-zone sovereign debt resurfaced, adding to ongoing worries about unrest in the Middle East and North Africa and about the potential for heightened inflation as oil prices rise.

?A correction is well overdue, but the technicals and fundamentals would suggest that any selloff may again be short and shallow,? analysts at Goldcore said in a note to clients.

Moody?s Investors Service lowered Spain?s bond ratings one notch to Aa2. The ratings agency said it feared that restructuring Spanish banks will cost more than initially thought, which would increase the pressure on the country?s public debt. Read more about Spain?s downgrade.

Meanwhile, silver for May delivery /quotes/comstock/21e!f1:si\k11 (SIK11 3,526, -78.70, -2.18%) declined 98 cents, or 2.7%, to settle at $35.07 an ounce, its lowest settlement in a week.

May copper /quotes/comstock/21e!f1:hg\k11 (HGK11 420.50, -0.75, -0.18%) wavered between small gains and losses as floor trading progressed, but it ended less than a penny lower at $4.20 a pound.

Copper lost 2.9% on Wednesday, selling off on a ?combination of soaring energy prices, a stronger dollar and continued concern about the macroeconomic outlook in light of rising inflationary pressures,? analysts at MF Global said in a note.

Platinum and palladium also fell, with April platinum /quotes/comstock/21n!f2:pl\j11 (PLJ11 1,765, -37.00, -2.05%) off $36.40, or 2%, to $1,765.60 an ounce and June palladium /quotes/comstock/21n!f1:pa\m11 (PAM11 767.80, -13.85, -1.77%) down $15.25, or 2%, to $766.40 an ounce.

The dollar index /quotes/comstock/11j!i:dxy0 (DXY 77.26, +0.53, +0.70%) , which compares the U.S. unit to a basket of six currencies, added to gains, recently rising to 77.252 from 76.702 in North American trade late Wednesday.

Meanwhile, fighting in Libya continued Thursday, as forces loyal to Col. Moammar Gadhafi bombed the oil town of Ras Lanuf.

Leaders of the North Atlantic Treaty Organization are meeting Thursday and Friday to discuss potential military action in Libya, including a no-fly zone, and European Union officials will gather Friday.