This week brought an upward change the Gold price hasn’t seen in weeks.  Gold & Silver experienced a dip Monday morning, but quickly recovered as technical trading gained positive momentum. “As the market started to come up, it was hitting [short-seller] stops and then that old huge level of support [for Silver], that low [traders] would put all their buy stops there. Once [prices] hit that, that's when it did that parabolic move up,” RJO Futures senior commodities broker Phil Streible said. “All those shorts that got in this morning, they're all covering, and all the longs that got blown out get back in on the long side.”  Gold is also regaining confidence  as there have been considerable selloffs in both Japanese stocks and the global equity markets. Investor sentiment quickly shifted toward the safe haven asset once economic concerns began to brew in Europe and Japan. " I think the feeling on the market is at the moment -- considering how there's been almost like a one-way street for equities over the last few months -- will this just be a couple of days blip and then the buyers will return?" Ole Hansen, head of commodities strategy at Saxo Bank, said in a phone interview from Copenhagen. Gold’s negative correlation to the stock market was on display this week, as the  yellow metal is heading for its best week in the past month. Mitsubishi analyst Jonathan Butler said, “The conditions are favourable for a continued role for Gold. Those loose economic policies aren't coming to an end just yet, though there are some voices in favour of a more hawkish stance in the United States.”

ALL EYES ON THE FED

This week loomed very large in the United States, as  Chicago’s Federal Reserve President Charles Evans spoke Monday in front of Congress on the outlook of the economy.  “This series of events certainly has the potential to overshadow what is likely to be a relatively quiet start to the week for fundamental macroeconomic indicators out of the US, but the big question is precisely when we’ll see the market react to the imminent tighter monetary conditions,” GFT Markets market strategist Fawad Razaqzada said. Many believed the Fed would announce the slowdown of their easing program which could drastically change the global economic landscape. However, after U.S. Federal Reserve Chairman Ben Bernanke spoke on Wednesday it was clear that the easing will continue for now. When Bernanke speaks, the Gold market listens. Wednesday was no different when  he said it was too early to slow down the central bank’s easing program based on current economic conditions.  " The correlation of the dollar with Gold has been quite strong lately, and today's weakness in the U.S. currency after Fed officials said it may be too early to be pulling back of QE (quantitative easing) certainly helps the metal," Societe Generale analyst Robin Bhar said. While Gold enjoyed a positive week, not all financial markets can say the same. Ongoing concern surrounding the future of quantitative easing (QE) and weakness in Asian markets weigh on equities markets as  stocks continue to trade down  heading into the weekend. “Positive durable goods sales were unable to bring in any lasting support and instead may be having the opposite effect, providing more evidence for the Fed to begin tapering QE,” CMC Markets’ senior market analyst Colin Cieszynski said. This week’s markets slump could disrupt a four week winning streak for both the S& P 500 and Dow Jones Industrial Average.

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

• Gold, $1387.00, Down $7.80.
• Silver, $22.45, Down $0.17.

Gold’s negative correlation to the stock market has been on display this week, as the  yellow metal is heading for its best week in the past month. Mistubishi analyst Jonathan Butler said, “The conditions are favourable for a continued role for Gold. Those loose economic policies aren't coming to an end just yet, though there are some voices in favour of a more hawkish stance in the United States.” St. Louis Federal Reserve President James Bullard said that he would need to see a rise in U.S. inflation before he voted to end the current round of quantitative easing.

Gold and Silver prices were mostly flat in early-morning trading, though turned slightly lower  after the release of the U.S. durable-goods report. Durable-goods orders rose 3.3 percent, which is greater than the expected 1.4 percent rise. Also, March’s report was revised to show a smaller decline. The durable-goods report is one of the key gauges for the U.S. economy, and one that the Federal Reserve monitors when considering monetary policy.

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

• Gold, $1,393.90, Down $0.90.
• Silver, $22.58, Down $0.04.

Lower global stock prices and weakness in the U.S. dollar pushed Gold higher  today, continuing the metal’s recent streak of volatile price action.  Widespread selloffs, subsequent short covering and speculation surrounding the future of quantitative easing (QE) have been the main contributors to Gold’s instability.  Weighing in on today’s price hike, Commerzbank analyst Carsten Fritsch said, “It’s the combination of a weaker U.S. dollar and falling stock markets that pushes up Gold.  This is not surprising as the firmer U.S. dollar and rising stock markets pushed Gold down before.”

Reports of manufacturing contraction in China prompted a  harsh decline in stock prices  throughout Asian markets following months of evidence that industrial output has been slowing.  This news along with investor concern about QE drove U.S. stocks lower as well.  " The market is still digesting [U.S. Federal Reserve Chairman Ben] Bernanke's comments, which took everybody by surprise... but today [St. Louis Fed President James] Bullard went a little bit in the other direction saying that tightening wouldn't come that quickly and I think that is lending support," Danske Bank analyst Christin Tuxen said.  Investors, analysts and economists alike are now squarely focused on the September 17-18 Federal Open Market Committee meeting as the potential date to announce the perpetuation or tapering of monetary stimulus. 

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

• Gold, $1,392.50, Up $22.10.
• Silver, $22.66, Up $0.08.

The Gold price is gaining this morning as a rising Japanese yen caused the U.S. dollar to fall. Another contributing factor is that  China’s Purchasing Managers’ Index data fell to a level which signals a contraction. Mitsubishi analyst Jonathan Butler said, “Expectation that China's growth is perhaps not as strong as it was, the equity rally, which has wobbled a bit just in [the] past few hours and dollar weakness are lending support to Gold.”

Weekly jobless claims fell to 340,000 for last week,  perhaps signaling an improving labor market. This has been a major factor in the continuance of the U.S. Federal Reserve’s quantitative easing program, and more improvement in unemployment numbers could mean an end to that program. ING said in a note, “It seems the market is now squarely focusing on the September 17-18 [Federal Open Market Committee] meeting for the Fed to make its move.”

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

• Gold, $1,388.60, Up $18.20.
• Silver, $22.42, Down $0.16.

The Gold price has settled lower again following a  day of turbulent price action  on the heels of Federal Reserve Chairman Ben Bernanke addressing the future of quantitative easing (QE).  Gold experienced a sudden jolt upward during the first part of Bernanke’s speech warning against premature slowing of asset purchases.  The latter part of Bernanke’s discourse indicated the Fed might be ready to rein in stimulus measures after the next few meetings.  Though QE has recently been the most important motivator of Precious Metals prices, a pullback in the scale of monetary easing is expected to weigh heavily on Gold and Silver.  “My sense is that Bernanke will look at U.S. consumer spending, U.S. business spending and U.S. hiring till the end of summer season and then take a call on QE,” said Chintan Karnani, an independent bullion analyst in New Delhi.  However, many analysts have pointed to decelerating U.S. economic expansion as a factor that could impede the Fed’s enthusiasm for bringing an end to QE. 

Along with Gold, equities markets are down following the release of the Federal Open Market Committee (FOMC) meeting minutes.  Concern of a forthcoming  scale down of the Fed’s bond-purchase packagedampened market sentiment that has responded so favorably to the program.  “The key takeaway is whether the Fed does more or does less all depends on the data,” said John Canally, investment strategist at Boston-based LPL Financial Corp.  “Stocks have been up so much year to date. Largely, people are looking for an excuse to sell.”  Investors will be closely eyeing the next FOMC meeting for further news of the future of QE. 

At 6:00 pm (EDT), the APMEX precious metals spot prices were:

• Gold, $1369.90, Down $0.50.
• Silver, $22.26, Down $0.32.

Precious Metals are trading higher this morning after  comments made by two U.S. Federal Reserve officials yesterday. Both New York Fed President William Dudley and St. Louis Fed President James Bullard supported the continuance of the Fed’s quantitative easing (QE) program until more economic progress is made. Gold has been trading against the U.S. dollar recently, as Societe Generale analyst Robin Bhar explains, “The correlation of the dollar with Gold has been quite strong lately and today's weakness in the U.S. currency after Fed officials said it may be too early to be pulling back of QE certainly helps the metal.”

Federal Reserve Chairman Ben Bernanke will provide testimony to Congress’ Joint Economic Committee at 10 a.m. (EDT). Investors are mainly looking for clues to the  Fed’s potential exit plan from the QE program. Craig Erlam of Alpari U.K. said, “The S& P and Dow hit new record highs again on Tuesday following comments from [Federal Open Market Committee] members James Bullard and William Dudley that suggested we will see no monetary tightening in the near future. If Bernanke makes similar comments today, I see no reason why we won’t see more record highs (for stocks) on Wednesday.”

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

• Gold, $1,395.60, Up $15.00.
• Silver, $22.91, Up $0.35.

Precious Metals prices are falling on speculation that an end could be near for the U.S. Federal Reserve’s quantitative easing (QE) program.  Gold seems to be setting the trend for the rest of the Precious Metals  , as it started falling this morning as the U.S. dollar gained. Physical demand remains strong in China, while in India, the world’s largest Gold consumer, physical buying has slowed as more limitations are placed on imports in an effort to curb the country’s deficit.

Two top Fed officials who have voting rights on the interest-rate-setting Federal Open Market Committee (FOMC)  are slated to speak today, and many analysts are looking for clues about the length of the current round of QE. St. Louis Fed President James Bullard will speak at 11:30 a.m. (EDT), while New York Fed President William Dudley, vice-chairman of the FOMC, will speak at 1 p.m. (EDT). Ishaq Siddiqi of ETX Capital said, “Stock traders are still digesting comments by Fed member Charles Evans overnight he said the U.S. recovery can be self-sustaining by 2014 but expressed caution about the nature of this recovery as any signs of pick-up could be temporary, suggesting the Fed is not ready to unwind stimulus just yet but perhaps within the next year.”

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

• Gold, $1,373.40, Down $13.70.
• Silver, $22.38, Down $0.31.

To start the week, Silver has hit a two and a half year low, following Gold’s downward trend. While there has been a massive sell-off of exchange traded funds (ETFs) in Gold, it had not had a major effect on Silver until now.  The move happened early in the Asian market with a large unidentified investor selling off a large volume of Silver.  “The drastic move lower happened pretty much after the Chicago Mercantile Exchange's electronic platform Globex opening,” MKS head of trading Afshin Nabavi said.

This week looms very large in the United States, as  Chicago’s Federal Reserve President Charles Evans is scheduled to speak today in front of Congress on the outlook of the economy.  “This series of events certainly has the potential to overshadow what is likely to be a relatively quiet start to the week for fundamental macroeconomic indicators out of the US, but the big question is precisely when we’ll see the market react to the imminent tighter monetary conditions,” GFT Markets market strategist Fawad Razaqzada said. Many believe the Fed may announce the slowdown of their easing program which could drastically change the global economic landscape.

At 9:00 am (EDT), the APMEX precious metals spot prices were:

• Gold, $1356.60, Down $11.30
• Silver, $21.68, Down $0.79.