Morning Gold & Silver Market Report – 6/10/2013

STOCKS START STRONG GOLD EASES

The U.S. stock market gained in overnight trading on positive news from Japanese markets as stocks there rallied. Investors seem to be overlooking weaker data coming out of China, which indicates the world’s second largest economy is stuck in stagnant growth, and instead are looking ahead to a speech from St. Louis Federal Reserve President James Bullard.  Bullard’s speech is the last scheduled before the Fed’s interest-rate decision in June.  Due the rest of this week is a smattering of data including retail sales where investors will be looking for the effects of sequestration and higher taxes.

The Gold price eased again on Monday, but do to Silver’s continued underperformance, the two metals hit their highest Gold/Silver ratio since August 2010. A stronger dollar is one of the key factors for Gold’s continued decline. The Federal Reserve’s loose monetary policy has been a key driver for Gold’s previous success, and with anticipation of that policy coming to an end soon, the Gold price has been struggling for support. Interestingly,  outflows from the world’s largest ETF New York’s SPDR Gold Trust slowed. The fund reported an outflow of only 6 tons last week as compared to an average of 24 tons a week over the previous two months.

At 9:10 a.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,382.80, Down $2.20.
• Silver, $21.84, Down $0.01.

Weekly Gold & Silver Market Recap – 6/7/2013

GOLD CLOSES LOWER IN UP & DOWN WEEK

This week had a bit of everything in the market, and by the end of the week Gold finished slightly lower. On Monday, Gold was off to a good start with news out of Asia. Both the U.S. dollar and some European shares fell due to poor Chinese data, which gave the Gold price a boost. The data announced this week played an important part in the price of Gold as the U.S. central bank said Monday it will keep up the current pace of its stimulus campaign until economic indicators show continued strengthening.  Standard Bank analyst Walter de Wet said, “The $1,400 level will be the peg in the ground for Gold, as this is a psychological mark, which also generated a lot of options activity lately, and I would see prices hovering around it in the run-up to the U.S labor report on Friday.” News out of India this week did nothing to support Gold. The country’s government is putting a restriction on imports of the metal. The Reserve Bank of India extended imports restriction on banks that they introduced last month. The announcement came after the country’s Gold imports increased between April and May by nearly 20 tons.  Societe Generale analyst Robin Bhar said, “The news that the RBI will curb imports of Gold by agencies has weighed prices down today as it is a wider restriction and could imply lower imports of Gold into the country.” Friday’s release of the U.S. jobs report completed the week by surprising experts with belter than expected numbers. Precious Metals prices initially added to losses after the release of the monthly jobs report,  but experienced some choppy trading afterwards  as investors had time to process the information. The report showed the addition of 175,000 jobs in the private sector in May, though the unemployment rate jumped to 7.6 percent. With many economists calling for the tapering of the Federal Reserve’s quantitative easing, this data simply adds another piece to the puzzle.

GOLD FINDS MANY AVENUES OF SUPPORT

Gold has seen many factors driving down the cost however, there are contrasting factors that lend support to the yellow metal. Weak manufacturing data for May weighed on the dollar Monday morning causing a lift in Precious Metals prices. Reports showed that industrial output fell for the first time since November.  Divergent economic data continues to cause uncertainty  about the future of the Federal Reserve’s monetary easing program. Jeffrey Wright, managing director at Global Hunter Securities claimed, “Drawing out the process of stopping QE [in the U.S.] or the rate of QE is supportive for Gold in the near term, since it will delay a rise in real interest rates.” While the unemployment numbers set Gold prices back Friday, earlier in the week the job growth report showed that the economic picture is not as clear as some seem to think.  The report showed 30,000 less new jobs created last month than was expected.  The report will be taken as an indication that the economy in the United States is slowing and gives cause for the U.S. Federal Reserve to continue its monetary easing program. “As far as the tapering debate goes, the report does nothing to bolster expectations that the Fed will ease its foot off the pedal over the summer,” Andrew Wilkinson, chief market economist at Miller Tabak, said. The continuance of easing has previously supported the cost of Gold. While the Gold prices have been lower as of late, it has given the physical buyers an great opportunity. According to the World Gold Council (WGC), demand for Gold is down about thirteen percent in the first quarter of this year compared to last year. However, that is mostly influenced by the large sell-off of electronically traded funds during that time.  It is a totally different story with Gold coins and bars, which are up 10 percent based on a five year average.  “The steady level of buying confirmed that central banks and institutions continue to favor Gold’s diversification benefits, as they reduce their portfolio allocations to U.S. dollars and euro,” the WGC states. “Again during the first quarter, the central banks adding to their Gold reserves were distributed widely around the globe, with volumes concentrated in emerging markets.” As Gold prices have been moving lower, the U.S. stock market has been doing the opposite. A survey shows that some investors are growing leery with such growth in the equities market. Nineteen analysts surveyed by Bloomberg showed the  largest proportion of bullish sentiment for Gold since mid-March. “The concern is that we see stock markets come under pressure and then see an increase in risk aversion,” said Mark O’Byrne, executive director of Dublin-based GoldCore Ltd., a brokerage that sells and stores bullion coins and bars. “Gold’s already had a correction, so people see value in the Gold market.”     

At 4:45 pm (EDT), the APMEX precious metals spot prices were:

• Gold, $1384.00, Down $33.80.
• Silver, $21.69, Down $1.13.

Morning Gold & Silver Market Report – 6/7/2013

JOBS REPORT ADDS ANOTHER PIECE TO THE PUZZLE

Precious Metals prices initially added to losses after the release of the monthly jobs report,  but experienced some choppy trading afterwards  as investors had time to process the information. The report showed the addition of 175,000 jobs in the private sector in May, though the unemployment rate jumped to 7.6 percent. With many economists calling for the tapering of the Federal Reserve’s quantitative easing, this data simply adds another piece to the puzzle.

Philadelphia Fed President Charles Plosser told reporters that the  markets have overreacted with talk of tapering quantitative easing. He said, “Since I don’t know what the outcome is going to be, the markets seem to take this very seriously at some level which I think is probably a mistake. We have to be careful not to allow ourselves to be whipsawed by market views of what the outcomes are going to be for them. We shouldn't be thinking we can't do this because the markets would back up.”

At 9 a.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,396.30, Down $21.50.
• Silver, $22.28, Down $0.54.

Closing Gold & Silver Market Report – 6/6/2013

GOLD & CRUDE OIL AWAIT FRIDAY’S JOBS REPORT

Gold is on the rise today with no key news in the market however tomorrow is a different story. Investors are anticipating Friday’s non-farm payroll data that will suggest how the U.S. Federal Reserve may move forward or pullback its quantitative easing measures. “The metal remains largely rangebound and is not profiting from a lower dollar today as investors are sidelined,” VTB Capital analyst Andrey Kryuchenkov said. The European Central Bank made the decision today to retain its main interest rate, and President Mario Draghi confirmed that the central bank’s policy will remain the same for now. “They (investors) are assessing Draghi's comments, U.S. jobless claims but most of all are awaiting non-farm payrolls tomorrow,” Kryuchenkov added.

The U.S. dollar has been on a downslope for the majority of the week with negative economic data, news which has in turn given both Gold and crude oil prices a boost. Crude oil closed on a high note today before Friday’s jobs report as confidence is brewing that the U.S. will reflect optimistic news. Technical analyst Jay Levine said, “All of its fortunes are tied to the report. Whether it can stay up is another question. I’m not that optimistic about it because pessimism enters the market all too easily.” Stephen Schork with the Schork Group believes the U.S. dollar will be tied to how oil performs. “It all comes down to what the dollar does,” he said. “You're going to get a lot of volatility tomorrow.”

At 5:12 p.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1415.00, Up $14.50.
• Silver, $22.63, Up $0.05.

Gold Regains 1400 Resistance at 1440

Daily

Chart  Prepared by Jamie Saettele, CMT 

Commodity  Analysis: To review, “Gold didn’t quite trade to new lows but silver did last week. Non-confirmations (divergences) of price extremes between related assets often mark market turns or at least the beginning of a reversal pattern. Gold’s low was also at a downward sloping trend channel. Recent chop could be the beginning of gold forming a bullish base.” Near term, watch for resistance from the ‘meridian’ line that has proved important on numerous occasions. The line is at about 1440 this week.

Commodity Trading Strategy: Flat

LEVELS: 1321 1367 1394 1440 1470 1500

Morning Gold & Silver Market Report – 6/6/2013

ECB HOLDS RATES MARKETS AWAIT U.S. JOB NUMBERS

The European Central Bank held its benchmark interest rates at record lows today spurring a rebound from a six-week low for the European markets. U.S. indexes are also up on the news.Investment manager Chris Godding at Signia Wealth Ltd. in London said,  “You need the global economy to pick up, you need confidence to pick up. There’s a lot of excess capacity in the European economy and there’s a lot of potential. The ECB just has to do its job in making sure the liquidity is there for that potential to be realized.” The move, or lack thereof, by the ECB to keep rates low indicates a desire to help that potential be realized.

The Gold price is hovering around the all-important $1,400 mark as investors wait for ECB President Mario Draghi to talk about the decision to keep rates low today. Investors are also waiting to hear anything from Draghi about negative interest rates as these would be favorable for the Gold price and other non-interest bearing assets. The big news story for Gold will be tomorrow’s U.S. non-farm payroll numbers.  Danske Bank analyst Christin Tuxen said, “And of course people are looking at tomorrow's U.S. non-farm payrolls, which will be instrumental to judge whether the Fed tapering is going to come sooner rather than later - whether it is in September or December that this will be announced is the big question for everything that is dollar sensitive at the moment, including Gold.”

At 8:09 a.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1399.50, Down $1.00.
• Silver, $22.48, Down $0.11.

Closing Gold & Silver Market Report – 6/5/2013

POOR JOBS REPORT LIFTS GOLD INDIA DISCOURAGED FROM INVESTING IN GOLD

Precious Metals received a boost today after the U.S. jobs report reflected worse than expected data  for the month of May. Analysts are highly anticipating Friday’s release of the monthly non-farm payrolls report to get a better sense of which direction the U.S. economy may be heading. There is concern within the market that the U.S. Federal Reserve may cut back its quantitative easing measures, however with a pessimistic view of the economy that concern may be out the window. “As the unemployment rate has been explicitly tied into quantitative easing, there has been a direct correlation between the non-farm payrolls and what happens to the Gold price,” Mitsubishi analyst Jonathan Butler said. 

Yesterday, India's Reserve Bank released some alarming news regarding their restrictions on Gold purchases by the country’s citizens. When the large sell-off in Gold occurred most recently, the worldwide demand for physical forms of the yellow metal increased to levels not seen in quite a while, with India first in line to acquire the asset. India has a cultural relationship with Gold, which plays an important role in weddings and other events such as festivals. “Various comments from officials hint at the potential for more measures to come, as the government is taking a hard line trying to curb the country's appetite for Gold,” UBS said in a note. “This poses a risk for Indian Gold demand up ahead should more and more restrictions be implemented.”

At 5:01 p.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1404.50, Up $5.30.
• Silver, $22.61, Up $0.10.

Gold Trades in Tiny Range at 5 and 20 Day Midpoints

Weekly

Chart  Prepared by Jamie Saettele, CMT 

Commodity  Analysis: To review, “Gold didn’t quite trade to new lows but silver did last week. Non-confirmations (divergences) of price extremes between related assets often mark market turns or at least the beginning of a reversal pattern. Gold’s low was also at a downward sloping trend channel. Recent chop could be the beginning of gold forming a bullish base.” Near term, watch for resistance from the ‘meridian’ line that has proved important on numerous occasions. The line is at about 1440 this week.

Commodity Trading Strategy: Flat

LEVELS: 1321 1367 1394 1439 1470 1500

Morning Gold & Silver Market Report – 6/5/2013

WEAK JOB REPORT SUPPORTS GOLD

Gold prices have started the morning up on the report of weaker than anticipated job growth in the month of May.  The report showed 30,000 less new jobs created last month than was expected.The report will be taken as an indication that the economy in the United States is slowing and gives cause for the U.S. Federal Reserve to continue its monetary easing program. “As far as the tapering debate goes, the report does nothing to bolster expectations that the Fed will ease its foot off the pedal over the summer,” Andrew Wilkinson, chief market economist at Miller Tabak, said. The continuance of easing has previously supported the cost of Gold, a trend supported by today’s rise in prices.

Today, Japan announced a third round of aggressive monetary easing to assist the country’s economic woes.  The main focus of the easing is to raise the income in the country and to draw in foreign investors to the region. However, the plan, which is being driven by Japan's Prime Minister Shinzo Abe, has been viewed with skepticism. “Every prime minister in the last 20 years has had an economic growth plan, the key is implementation. Either you make some progress in the next 6-12 months, or people realize it is just another bunch of hollow promises,” Bank of Singapore's chief economist Richard Jerram said. 

At 8 a.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1404.00, Up $4.80.
• Silver, $22.65, Up $0.15.