Gold Putting Traders to Sleep Before Next Move

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

Closing Gold & Silver Market Report – 6/4/2013

LOWER GOLD COST DRAWS IN BUYERS

Gold ended the day down in afternoon trading, pushed there by heavy selling pressure. 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.”

The U.S. jobs report will be released Friday, and many believe it will be a strong indication of what the next move by the U.S. Federal Reserve will be.  All the talk has been about whether the Fed would end its aggressive monetary easing program, and the jobs report could shed light on the subject.  While the Fed has backed its policy saying it has helped the economy, one investment officer thinks not. Bill Gross, founder of bond giant Pimco, said toward Fed Chairman Ben Bernanke, “Well it's been five years Mr. Chairman and the real economy has not once over a 12-month period of time grown faster than 2.5%. Perhaps, in addition to a fiscally confused Washington, it's your policies that may be now part of the problem rather than the solution."

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

• Gold, $1400.90, Down $13.00.
• Silver, $22.59, Down $0.24.

Roubini: Why gold, ‘that barbarous relic,’ will trade below $1,000 by 2015

1. Gold spikes in times of serious economic, financial and geopolitical risks — think “financial Armageddon.” But that doesn’t make it such a safe investment, says Roubini, noting sharp falls in gold prices during crisis periods of 2008 and 2009.
2. Gold performs best in times of high inflationary risks, as its popularity grows under the view that it is a hedge against inflation.  But even after aggressive monetary policy by central banks, he says, global inflation is low and dropping further, and commodity prices are adjusted downwards.
3. Gold provides no income. With equities, you get dividends with bonds, coupons and with property, rent. Now that the global economy is recovering, other assets are providing higher returns — so who needs gold, which has “vastly” underperformed since early 2009 versus stocks, he asks.
4. Real rates are headed higher on the view that the Federal Reserve and other central banks are going to back out of QE and zero-policy rates. “The time to buy gold is when the real returns on cash and bonds are negative, and falling,” and that’s not now, he says.
5. Highly indebted sovereigns are not pushing investors towards gold and away from their bonds. In fact, many of these governments have high stocks of gold, which they may dump to cut debt. Italy, for one, could be tempted to pare back on its huge holdings.
6. Political conservatives in the U.S. have hyped gold so much that it’s become counterproductive. “For this far-right fringe, gold is the only hedge against the risk posed by the government’s conspiracy to expropriate wealth,” he says.

Morning Gold & Silver Market Report – 6/4/2013

• Gold, $1,397.10, Down $16.80.
• Silver, $22.42, Down $0.40.

Gold May Face The ‘Meridian’ Line Again as Resistance

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

Closing Gold & Silver Market Report – 6/3/2013

MARKET’S FOCUS IS ON ‘THE OTHER BULLION’

Rick Rule of Sprott Asset Management remains bullish for Gold especially in the long-term, but is presently optimistic for the underrated metals Platinum and Palladium. “We call that ‘The Other Bullion,’” he said. “What's particularly attractive about it is that the above-ground inventory is less than 12 months fabrication supply. There is no historical supply. All of the supply is new-mine supply,” Rule said regarding the Silver-white metals. Rule commented on Gold and its performance by saying, “Certainly, it's due for a technical recovery,” he said. “Would you rather own Gold, or would you rather own the U.S. 10-year Treasury, which Jim Grant famously decided was a return-free risk?” When asked about investors’ portfolios he agreed Gold is an important factor to consider. “Within the general stock market, there's a place for that in every portfolio, but also I think an insurance trade, which Gold generally has been, has a place in every portfolio, too.”

Additional mixed U.S. economic data was released today with manufacturing activity showing a decline in May for the first time in six months and a slight rise in construction spending, although it was less than expected. Also, the Institute for Supply Management (ISM) reported its index of national factory activity fell to 49.0 in May (a reading below 50 signifies a reduction in the manufacturing sector).  Economists suggest that U.S. economic growth in the second quarter will slow from the first quarter’s 2.4 percent.

At 5:15 p.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,412.80, Up $17.80.
• Silver, $22.77, Up $0.43.

Morning Gold & Silver Market Report – 06/03/2013

U.S. STOCKS, GOLD UP BEFORE WALL STREET OPENS

Positive data coming out of Europe has helped push U.S. stock futures higher before the opening bell. The market is looking to rebound from a drop last week as it tries to shake off China’s manufacturing data and potentially lukewarm U.S. manufacturing due later.  Chief market economist Peter Cardillo of Rockwell Global Capital said,  “We’re looking at a rebound right now. It’s a heavy week for economic data, and that’s going to keep the guessing game of the Fed alive. It means we can expect more volatility.” This week’s data is key for the U.S., and it culminates with May’s nonfarm payroll numbers.

The Gold price is recovering from last session’s slide as well. Both the U.S. dollar and some European shares fell due to poor Chinese data, which gave the Gold price a boost. The data due this week will play an important part in the price of Gold as the U.S. central bank has said 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.”

At 9:14 a.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,397.10, Up $2.10.
• Silver, $22.60, Up $0.26.

CPI ADJUSTED SILVER PRICE