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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
6/4/2013 4:14:59 PM By: Nicholas Wilsey
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
The week could be a big one for gold. If Friday’s key payrolls data disappoints in some fashion, then many may relax on the idea the Federal Reserve will pull back on its bond-buying program. And that could be supportive of gold’s view as an inflation hedge against a weak dollar.But that’s not the whole story for gold, which is also up against some bearish investor flows. Barclays analysts point out the latest CFTC data shows a big fall in long positions on gold, while short positioning is on the rise. And while physical demand has been strong, from China and India for example, exchange-traded outflows are still a problem, the strategists note.
Enter the latest big bear view on gold.
Nouriel Roubini, an economist affectionately known as Dr. Doom, laid out a six-point case over the weekend as to why the gold bubble has burst and it will be under $1,000 by 2015. The metal dropped 5.4% in May — dropping seven out of the last eight months — and is lolling under the $1,400 level. Here’s a recap of Roubini’s six-point case, in his piece for Project Syndicate:
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
Roubini says gold remains a “barbarous relic,” with no intrinsic value, used as a hedge against “irrational fear and panic.” But investors can get their hedge against extreme tail risks — which have come way down — elsewhere.
Last week, famed investor Jim Rogers said the gold correction wasn’t going to end until more people were scared, noting it’s had an “abnormal” 12-year run. And investment banks have been paring back on their gold forecasts since the metal started falling out of bed last April. J.P. Morgan is among the most recent.
Morning Gold & Silver Market Report – 6/4/2013
6/4/2013 8:25:50 AM By: Ryan Schwimmer
FRIDAY DATA EYED FOR CLUES TO QE’S END
The Gold price is giving up yesterday’s gains in morning trading as
investors speculate on upcoming economic data and the end of the Fed’s quantitative easing program. U.S. nonfarm payroll data will be released Friday, and many investors will be looking to the report for clues on the current state of the economy. Mark Keenan of Societe Generale said, “Signs of when monetary easing is going to taper are going to be a function in the short term (for Gold prices). We are going to get over-scrutinized analysis of any signs that might suggest it could end slightly earlier than anticipated. Employment numbers in the United States have always been and will remain a key barometer to affect any tapering.”
The trade deficit in the U.S. is yet another figure the Fed watches to gauge the status of the economy, and a report this morning
showed that the trade deficit widened in April by 8.5 percent. Many economists were expecting an even larger increase, however, so stock futures added to gains. The trade gap rose individually with China, the European Union, the OPEC oil producing countries, and Japan, though the deficit related to petroleum fell.
At 9 a.m. (EDT), the APMEX Precious Metals spot prices were:
- Gold, $1,397.10, Down $16.80.
- Silver, $22.42, Down $0.40.
June 03, 2013 - 12:00:56 PDTSome things only make sense when you connect the dots. Read More
June 03, 2013 - 13:00:40 PDTOur goal is to help as many people as possible become aware of the disaster we are rapidly approaching with the end of c... Read More
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
6/3/2013 4:25:44 PM By: Brandi Brundidge
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.
June 03, 2013 - 06:11:00 PDTUnfortunately, the " sugar high" produced by those foolish measures is starting to wear off. We are going to experience ... Read More
June 03, 2013 - 07:03:21 PDTTechnically we’re all poorer than we were before 2008 happened. Most of us are making less money. And we’re spending mor... Read More
Morning Gold & Silver Market Report – 06/03/2013
6/3/2013 8:54:56 AM By: Geoffrey Varner
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.
The Long Wait (nearly 21 months) is Almost Over
Peter Degraaf
30 May 2013 [READ]
May 31, 2013 - 14:42:08 PDTThe implication is that the market is able to calculate the value proposition of owning gold over paper and, below $1,40... Read More
May 31, 2013 - 15:55:46 PDT" There is also concern about the possibility of a breakout of inflation, although current inflation risk is not consider... Read More
May 31, 2013 - 14:12:17 PDTNobody in government is willing to hand back power once taken. It is like the conviction rate in New York City – 99%. Ci... Read More
May 31, 2013 - 12:42:33 PDTthree reasons being discussed for this drop in stocks. First, this is the worst month for the long bond in absolute pri... Read More
By Brandi BrundidgeMay 31, 2013GOLD ON THE MOVE
Gold experienced both ups and downs this week with ongoing speculation over whether the U.S. Federal Reserve would end quantitative easing (QE) earlier than expected. Even though the physical Gold demand is on the rise, a stronger U.S. dollar has kept pressure on the yellow metal. Gold continues to be overshadowed by exchange traded funds, which are recording record outflows. A key resistance level for Gold is $1,400 per ounce. Saxo Bank senior manager Ole Hansen said, “We made several attempts at the $1,400 level but, especially the last three, have failed every time. The tug of war continues as the physical market is happy picking up Gold at these levels, but the paper market isn't — they are seeing bond yields up and inflation staying subdued. They're potentially worried that the [U.S.] dollar could have a bit of a renaissance.”
STRONG U.S. DATA CREATES CONCERN IN MARKET
As the U.S. economy continues to reflect a healthy recovery and the dollar appears stronger, investors have noticed that the Gold price (which negatively correlates to the dollar) has felt the pressure. On Tuesday, the Conference Board’s Consumer Confidence Index reported an increase to 76.2 in May, up from 69 in April, reaching its highest point in five years. " Back to back monthly gains suggest that consumer confidence is on the mend and may be regaining the traction it lost due to the fiscal cliff, payroll tax hike and sequester," the Conference Board director of economic indicators Lynn Franco said.
Fear surrounding the longevity of the Fed’s liberal monetary easing program continues to weigh heavily on equities markets as the Dow Jones Industrial Average and S& P 500 retreat from record highs. " The market was at overbought levels and you can see these short-term pullbacks in the market,” Bespoke Group co-founder Paul Hickey said. As stocks posted triple digit losses this week, many analysts and investors continue to speculate what effect a possible end of QE will have on stock and Precious Metals markets.
METALS RISE ON POOR U.S. ECONOMIC DATA
U.S. stock futures held steady while Precious Metals added to gains after Thursday morning’s release of economic data. First quarter U.S. gross domestic product (GDP) figures were revised downward to show a 2.4 percent growth, though expectations were for no change. Also, the weekly jobless claims report showedclaims jumped by 10,000, which was more than expected. Precious Metals prices jumped after the news, as the less than stellar economic data points toward business-as-usual for the Fed’s QE program.
The Gold price finally broke through the $1,400 per ounce level and many analysts were looking for the price to hold to show that it has broken through the resistance point. SP Angel analyst Carole Ferguson said, “The fall in equity markets in the past few days shows that there is perhaps some concern that these had moved up too quickly at a time when you also had everyone buying the [U.S.] dollar on expectations of U.S. recovery. I think the reversal of that is what is obviously helping Gold and prices could settle not far from here if the $1,400 level is sustained, which will depend on whether investors continue to buy into risk or not.”
SHORT WEEK ENDS WITH METALS DOWN
As the week and month come to an end, the Gold price continued to struggle with finding support and fell more than 1 percent on mixed U.S. economic data. " The metals were already under pressure going into the end of the month as many people have a lot of short positions outstanding, and the consumer confidence data just added fuel to selling," brokerage Marex Spectron’s Carlos Perez-Santalla said.
Though the prospects of a slowdown of the QE program have prompted selloffs in equities markets, the Dow Jones Industrial Average and S& P 500 are both in positive territory today after reports indicated thatconsumer sentiment has reached its highest level in almost six years. Though reassuring economic factors helped modestly boost stocks heading into the weekend, investors remain mindful of the stock market’s primary motivator over the last several months: the $85 billion worth of mortgage-backed securities purchased by the Fed. " All eyes remain on the U.S., analyzing every piece of data to establish if, and when, stimulus measures will be withdrawn — with every piece of bad news being actively welcomed by the market," Interactive Investor’s head of investment Rebecca O’Keeffe wrote in a note.
At 5:10 p.m. (EDT), the APMEX Precious Metals spot prices were:
- Gold, $1,389.80, Down $24.20.
- Silver, $22.31, Down $0.49.
By Geoffrey VarnerMay 31, 2013MARKETS BRACE FOR MONTH END PROFIT TAKINGU.S. stock indices are set to open lower this morning as investors await consumer spending and manufacturing data to give more clues on the future of the U.S. Federal Reserve’s bond buying program. End of month volatility is expected to be high today as well. ETX Capital market strategist Ishaq Siddiqi said in a note, “It’s the end of the month, so we are seeing huge bouts of volatility. Furthermore, appetite to book profits is running high before the month of June starts as stock indices have performed respectably again in May.”
The Gold price is not immune to this volatility, as it has backed off its two week highs. Gold has a strong inverse correlation to the U.S. dollar and changes in the price of the dollar have an impact on the Gold price. Commerzbank chief Precious Metals trader Adrien Biondi said, " Gold is clearly reacting to the movements in the dollar and share markets." Fears that the U.S. central bank could reign in their bond buying program had initially sparked a rally in the dollar and a selloff in Gold as weak data has come out, people have once again put faith in assets like Gold.
At 9:14 a.m. (EDT), the APMEX Precious Metals spot prices were:
- Gold, $1,408.70, Down $5.30.
- Silver, $22.40, Down $0.39.
http://silverreport.blogspot.sg/2013/05/cpi-adjusted-silver-price.html Silver is probably the only commodity that I know of that is still below the 1980 nominal high of 50.00!
