Morning Gold & Silver Market Report – 7/18/2013

JOBLESS CLAIMS FALL BERNANKE CONTINUES TESTIMONY

The Gold price gave up early gains after the  release of the weekly jobless claims report, but has since recovered into the black again. The report showed a drop in new claims to the lowest level in more than two months, which should lead investors and analysts to believe the U.S. Federal Reserve will have more reason to begin tapering its quantitative easing (QE) program. Continuing claims, however, rose to the highest level since February.

Fed Chairman Ben Bernanke  will continue his testimony to Congress today. Yesterday, the Gold price dipped after Bernanke stated that the plan is still in place to begin tapering QE later this year, though the Fed could alter that plan if needed, based on changing economic climate. Commerzbank analyst Eugen Weinberg said, “The market is today stabilizing as there is no more expectations for an imminent QE3 end.”

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

• Gold, $1,287.20, $6.70.
• Silver, $19.56, Up $0.05.

Silver Slammed As Stocks And Bonds Slumber

We suspect few would have expected a relatively quiet kind of day for stocks and bonds today but that is what we got - with all the action taking place at the release of Bernanke's prepared remarks. Thanks to DuPont (Peltz not talking) which added 21 points to the Dow, the Dow ended mildly green. The Nasdaq and S& P had small gains as the Trannies outperformed. Treasuries saw a notable 'hump' compression with the belly dropping 6bps but the long-end and the short-end only -2bps. VIX unwound all of yesterday's relative 'hedge' premium and closed unch to Monday. The USD ended modestly higher as did WTI (back over $106.50) but gold and copper end down 0.75% for the week. It was silver that suffered from apparent sanguineness (sic.) as it slumped 4% from the earlier highs of the day. Of course, tomorrow's another day of Bernanke as the " wait-and-see" market rolls on - closing once again perfectly at VWAP...

 



 

and Treasuries had a belly compression kind of day...



 

 

Spot the odd commodity out...



 

In Summary, from just before the release of the prepared remarks, markets did the following...

• S& P 500 Futures +3.25 to 1675
• 10Y Rates -3.5bps to 2.49%
• USD Index +0.07% to 82.64
• WTI Oil +0.76% to $106.60
• Gold -$11.25 to $1276.00

Closing Gold & Silver Market Report – 7/17/2013

QE TALKS WEIGH ON GOLD PAULSON CONTINUES TO TOUT GOLD

The Gold price has settled lower today as U.S. Federal Reserve Chairman Ben Bernanke confirmed plans to begin scaling back asset purchases of $85 billion per month, though he left some wiggle room by stating that the tapering of quantitative easing (QE) could be altered following change in the economic climate.  Bernanke has stated that he plans to  begin reducing the current volume of bond purchases by year-end and completely dissolve the program by mid-2014.  “The market is woken up to the fact that we are seeing the end of tapering and the potential end of QE, and that takes the brush off the rose,” Integrated Brokerage Services’ head Precious Metals trader Frank McGhee said.

Retail investors continue to await indicators of a new trajectory for the future of Gold.  The yellow metal is down roughly 25 percent year-to-date and the QE program that caused an onslaught of buying from investors who feared hyper-inflation appears to be near the end of its tenure.  Though inflation is currently below 2 percent, legendary hedge fund manager and Gold bug  John Paulson is not wavering in his outlook for the metal.  Paulson claims that, “[over time], as we see the economy grow, credit expand and inflation or the indicators of inflation start to rise, I think the demand for Gold will start to increase again.”  As the short term for Gold remains bearish, investors interested in a long-term store of wealth and safeguard against dollar devaluation continue to acquire Precious Metals as portfolio insurance.   

At 5:02 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,277.70, Down $15.70.
• Silver, $19.39, Down $0.64.

Morning Gold & Silver Market Report – 7/17/2013

BERNANKE’S REMARKS SHED LIGHT ON TAPERING

Precious Metals prices reversed losses this morning after the release of U.S. Federal Reserve Chairman Ben Bernanke’s prepared remarks for his Congressional testimony, which begins today. Bernanke’s last appearance sparked a rebound in the Gold price as he said there was no timetable for tapering the quantitative easing (QE) program. Today’s remarks read, “I emphasize that, because our asset purchases depend on economic and financial developments,  they are by no means on a preset course.” He did say the Fed plans to begin tapering later this year, and end QE “around midyear” in 2014, but only if economic conditions allow.

Bernanke further elaborated on the Fed’s plans, saying, “On the other hand, if the outlook for employment were to become relatively less favorable, if inflation did not appear to be moving back toward 2 percent, or if financial conditions — which have tightened recently — were judged to be insufficiently accommodative to allow us to attain our mandated objectives, the current pace of purchases could be maintained for longer. [If needed, the Fed is also prepared] to employ all its tools, including an increase in the pace of purchases for a time.”

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

• Gold, $1,296.10, Up $2.40.
• Silver, $20.09, Up $0.07.

Closing Gold & Silver Market Report – 7/16/2013

GOLD PRICE MAINTAINS BERNANKE’S BALANCING ACT

The Gold price continued to rise throughout the day, showing strength with the stabilization of U.S. inflation pressures. This leveling out suggested that if the U.S. Federal Reserve tapers its bond buying program, it would happen later in the year as opposed to immediately. Investors continue to focus on Federal Reserve Chairman Ben Bernanke’s comments at this week’s semi-annual Congressional testimony for signs of what is to come. Today’s gains come on the heels of the U.S. Labor Department’s release of the Consumer Price Index (CPI), which increased 0.5 percent, the largest increase since February.  Carlos Perez-Santalla at brokerage Marex Spectron said, " The CPI figure is lower than what the Fed wants, so the Gold market sees this as tapering is further away." The Gold price is still down more than 20 percent this year but gained five percent last week.

Investors from all sectors will be looking for clues from Bernanke on Wednesday and Thursday of this week.  Pimco's Mohamed El-Erian said,  " [Bernanke] is going to try to do a high-wire act without the excitement. He's just going to try to convey he's data-dependent, he's flexible, he's adaptable, and he's going to try to not rock the boat." The last time Bernanke rocked the boat, on May 22, the stock market suffered for it. El-Erian goes on to explain that the Fed wants to taper for a couple of reasons. They have an optimistic view of the economy and they are worried about the costs and risks, or collateral damage and unintended consequences, of the program.

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

• Gold, $1,293.40, Up $6.90.
• Silver, $20.06, Up $0.14.

Gold Trade is Quiet at Resistance

Daily

Chart  Prepared by Jamie Saettele, CMT

Commodity  Analysis:  Gold’s rally consists of 2 equal legs (almost exactly). This relationship is typical of corrective movements. Just as important, the level is also defined by the 6/20 close. Volume that day was the 4th  highest of the year, behind only 4/12, 4/15-4/16. The current area is also defined by Elliott channel resistance. In other words, there is a lot to push through here. Between here and 1340 is ‘no man’s land’. A push above 1340 would warrant a closer look, possibly offering a chance to buy dips. Several patterns were discussed at the beginning of Friday’s  DailyFX Plus webinar.  The bigger picture was covered last week.

Commodity Trading Strategy: Flat

LEVELS: 1223 1243 1267 1299 1319 1349

Morning Gold & Silver Market Report – 7/16/2013

ALL EYES ON BERNANKE TESTIMONY

Precious Metals prices are slightly higher while U.S. stock futures are little changed in early-morning trading. Many investors are looking forward to U.S. Federal Reserve Chairman Ben Bernanke’s Congressional testimony tomorrow. In the meantime, inflation data for June was  in line with expectations at 0.5 percent. Interactive Investor’s Mike McCudden said, “Any suggestions of overheating here will heap pressure on the Fed to cool the market, and that’s going to add renewed calls for [quantitative easing] tapering.”

The Gold price showed little reaction to the inflation report. Analysts believe most investors are waiting on the sidelines for the Fed to  give more of a clear direction for monetary policy. A Hong Kong-based trader told CNBC, “The Fed will try to calm the markets and make them think it will not exit soon. They might wait for data points for the next few months to make a call.”

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

• Gold, $1,292.90, Up $6.40.
• Silver, $19.98, Up $0.05

History shows gold could fall another $500

Closing Gold & Silver Market Report – 7/15/2013

RESEARCH SUPPORTS GOLD SLOWING CHINESE GDP ALARMS GERMANY

Gold is on the rise today on the release of several supportive research notes.  The market became bearish on Gold as it dropped an estimated 13 percent between trading sessions, but investors are bullish once again as the support level is increasing.  " The strength in China and India Gold premiums, the recent move higher in Gold lease rates and central bank Gold buying indicate physical demand for Gold may provide some support in the near term," Deutsche Bank wrote in a note today. 

Another positive for Gold came from China’s sluggish economic data, which reflected a drop in their gross domestic product during the second quarter.  The weakness out of China may have investors on the verge of suggesting monetary easing is in the near future for the nation.  As China’s growth figures dwindle, German concerns grow due to the fact that roughly 6 percent of German exports are shipped to China.    " The German economy is not as strong as people think. It has a big trade surplus, but that is not the same thing as a growing economy," Strategy Economics founder Matthew Lynn told CNBC. " Exports are slowing, domestic demand is weak, the banks are exposed to peripheral Europe, the population is declining and the government has too much debt to take up the slack."

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

• Gold, $1,284.70, Up $4.10.
• Silver, $19.98, Up $0.10.

Gold in No Man’s Land Between Current Level and 1340

4Hour

Chart  Prepared by Jamie Saettele, CMT

Commodity  Analysis:  Gold’s rally consists of 2 equal legs (almost exactly). This relationship is typical of corrective movements. Just as important, the level is also defined by the 6/20 close. Volume that day was the 4th  highest of the year, behind only 4/12, 4/15-4/16. The current area is also defined by Elliott channel resistance. In other words, there is a lot to push through here. Between here and 1340 is ‘no man’s land’. A push above 1340 would warrant a closer look, possibly offering a chance to buy dips. Several patterns were discussed at the beginning of Friday’s  DailyFX Plus webinar.  The bigger picture was covered last week.

Commodity Trading Strategy: Flat

LEVELS: 1223 1243 1267 1299 1319 1349

Morning Gold & Silver Market Report – 7/15/2013

GOLD RETREATS, STOCKS POSITIVE ON RETAIL SALES

The Gold price dipped lower in overnight trading Monday after posting the strongest weekly gain in nearly two years. A stronger dollar, rising ahead of U.S. retail sales data, is putting pressure on the Precious Metal.  Danske Bank analyst Christin Tuxen said,  “There is expectation that U.S. retail sales may be a fairly good number following the steady improvement we have seen in the past few months, which of course could add to the picture that will impact on the Fed's decision to taper stimulus.” The Gold price’s rise last week was due in part to U.S. Federal Reserve Chairman Ben Bernanke’s comments supporting continued easing for the foreseeable future. Tuxen continued to say, “The main focus is Bernanke's testimony to the Congress [Wednesday and Thursday], and that should really give us more guidance to whether tapering will start in September or December.”

While retail sales data may be hurting the Gold price, it is fueling U.S. stock prices.  David Kelly, chief global strategist at J.P. Morgan Funds, said,“[The retail-sales report for June] should reassure analysts that despite some weakness in overall GDP growth, real consumer spending should have grown for the 14th consecutive quarter this spring.” This morning’s gains come on the heels of record closings Friday for both the Dow and the S& P. Bank earnings are still in the spotlight today as the second quarter earnings season continues.

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

• Gold, $1,283.70, Up $3.10.
• Silver, $19.86, Down $0.03.

Weekly Gold & Silver Market Report – 7/12/2013

PRECIOUS METALS BEGIN AND END WEEK WITH A RISE

The week began with the unofficial start to the second quarter earnings season, and futures pointed positive. Earning seasons are the months following the end of a quarter January, April, July, and October. Aside from the regular slew of financial news this week, including the release of the minutes from the Federal Open Market Committee meeting from June, investors will begin looking toward second-quarter earnings. Many companies have already brought down their growth forecasts, including financial firms which are expected to set the tone this quarter.  Dan Greenhaus, chief global strategist at BTIG, said, “This would be the second consecutive quarter of unimpressive earnings growth, which is rubbing many clients the wrong way.”

Precious Metals mostly added to gains during Monday trading,  and strategists at Deutsche Bank believe that the correction could be finished. With the caveat that Federal Reserve policy decisions could still hamper Gold’s recovery, the statement read, “It is possible that the major part of the Gold price correction has already occurred.” At Monday’s opening, the Gold price was approximately 30 percent down from its record high in September 2011.

POSITIVE DAY FOR STOCKS WITH A RECOVERING ECONOMY

U.S. stocks climbed on Tuesday, specifically the S& P 500. The S& P was within one percent of closing at it’s all time high as Wall Street seemed to be embracing a stronger economy, including higher interest rates. The Gold price extended its positive numbers into a second day, rising the most in seven sessions after breaking through a key technical level.  China’s inflation data boosted the Precious Metal’s appeal as a hedge against inflation for the world’s second largest consumer of Gold. Analysts have said that rising Chinese inflation should hamper significant easing responses as we continue to see this enhanced demand for Chinese Gold.

WEDNESDAY’S  FOMC  MINTUES RELEASE SUGGESTED  CONTINUING  MONETARY  EASING

Mid-week the minutes were released from the Federal Reserve’s June meeting, which affirmed many investors’ presumptions that officials prefer to see an improvement in the job market before tapering fiscal policy. “The Gold market is pleasantly surprised, and is rallying on the minutes,” Tom Power, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said. “The unemployment number is the key number that the Fed is watching, and with that still above 7.5 percent, investors think that easing is here to stay for some time.” Gold increased by 0.3 percent after the minutes were released, extending its gains to a third consecutive day.

METALS END THE WEEK ON A POSITIVE NOTE

Precious Metals prices began trading flat Friday as  Gold and Silver were set up for their first week of gains in one month. Federal Reserve Chairman Ben Bernanke’s assuring commitment to ultra-loose monetary policy helped drive the safe haven appeal of metals as a hedge against dollar devaluation. This week’s upward movement has some experts predicting a reversal in the recent downward trend Gold has been experiencing. Felix Zulauf, president of Zulauf Asset Management, said, “Gold has turned here for a good recovery bounce, as the technicals are extremely oversold, leading to a run into the mid/upper $1,300 in coming weeks.” The perpetuation of quantitative easing measures by central governments weighs heavily on world currencies and has traditionally increased demand for Precious Metals.

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

• Gold, $1,286.10, Up $3.20.
• Silver, $19.95, Down $0.10.

Mid-Day Gold & Silver Market Report – 7/12/2013

PRECIOUS METALS, STOCKS TAKE BREATHER

Precious Metals prices are trading flat today as  Gold and Silver are set for their first week of gains in one month. Federal Reserve Chairman Ben Bernanke’s assuring commitment to ultra-loose monetary policy helped drive the safe haven appeal of metals as a hedge against dollar devaluation. This week’s upward movement has some experts predicting a reversal in the recent downward trend Gold has been experiencing. Felix Zulauf, president of Zulauf Asset Management, said, “Gold has turned here for a good recovery bounce, as the technicals are extremely oversold, leading to a run into the mid/upper $1,300 in coming weeks.” The perpetuation of quantitative easing measures by central governments weighs heavily on world currencies and has traditionally increased demand for Precious Metals.

Following Thursday’s market rally that boosted equities indexes to new record highs,  stocks remain relatively flat headed into the weekend. “The market is catching its breath after a big push to a record high,” Alan Gayle, senior strategist at RidgeWorth Capital Management, said. As Ben Bernanke has asserted that monetary stimulus measures will continue uninterrupted, stocks have continued their impressive climb. Investors will await news of a possible exit strategy as analysts and economists weigh the potential effects a tapering program will have on markets.

At 1 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,279.40, Down $3.50.
• Silver, $19.90, Down $0.15.

Morning Gold & Silver Market Report – 7/12/2013

STOCKS HOLD STEADY GOLD DEMAND HIGH IN CHINA

The U.S. stock market is holding steady this morning in premarket trading after surging yesterday to record highs.  Banking juggernauts J.P. Morgan Chase & Co. and Wells Fargo  have already reported earnings on tap for later are producer prices, consumer sentiment data and a few Federal Reserve speakers. Bank earnings are taking center stage as the financial sector is projected to have the highest earnings-growth rate of any sector for the second straight quarter in the S& P index.

Gold prices are coming down after a four day rally, but demand in China, the second largest consumer of Gold in the world, remains high. Demand relative to supply is so high that Gold premiums were at levels not seen since April of this year. These premiums are predicted to remain tight for the next few months. Prices for .9999 pure Gold on the Shanghai Gold Exchange were nearly $30 per ounce above the London spot price today normal Gold premiums are usually $5 to $7 above spot. The supply is tight due to import quotas by the Chinese central bank and a seasonal shutdown of Gold refineries. Gold bars are becoming scarce in the country.  Albert Cheng, managing director for the Far East region of the World Gold Council, said,  “The current Gold supply is getting increasingly constrained while the demand remains strong.”

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

• Gold, $1,275.30, Down $7.10.
• Silver, $19.88, Down $0.17.

Gold Rally is in 2 Equal Legs Watch Near Term Channel for Support

4Hour

Chart  Prepared by Jamie Saettele, CMT 

Commodity  Analysis:  Gold’s rally consists of 2 equal legs (almost exactly). This relationship is typical of corrective movements. Just as important, the level is also defined by the 6/20 close. Volume that day was the 4th  highest of the year, behind only 4/12, 4/15-4/16.

Commodity Trading Strategy: Limit on longs hit at 1295, sit tight for now.

LEVELS: 1223 1243 1267 1299 1319 1349

Closing Gold & Silver Market Report – 7/11/2013

GOLD, STOCKS RALLY ON QE COMMITMENT

The Gold price nearly reached a three week high Thursday following indications from Federal Reserve chairman Ben Bernanke that loose monetary policy will remain in place for the foreseeable future. Today’s price increase has given Gold its fourth straight session of gains as the metal begins to eye the $1,300 mark. Though Gold and Silver have been experiencing substantial downward pressure since the mid-April correction that saw Gold fall more than $200 an ounce,  ongoing commitment to the Fed’s quantitative easing (QE) program  may shift sentiment toward Precious Metals, which have historically benefited greatly from QE. Metals analyst Edward Meir at INTL FCStone said, “Investors prefer to focus on the probability that the Fed will remain easier for far longer.”

The stock market rally continues today with the  S& P 500 closing at an all-time high. The stimulus measures that have been so bullish for Gold in the past have also been an integral factor in boosting equities. “The story in stocks for this year is about confidence replacing uncertainty and anxiety,” Hank Smith, chief investment officer at Haverford Trust Co, said. As accommodative monetary policy continues, all eyes and ears remain intently focused upon every utterance from Bernanke. Precious Metals and stock markets alike have come to rely heavily on the liquidity offered by the Fed’s monthly asset purchases. Investors will await future Fed meetings to gain insight into the future of the program.

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

• Gold, $1,286.70, Up $36.80.
• Silver, $20.21, Up $0.95.