Gold Rally May Find Resistance at 1322

Daily

Chart  Prepared by Jamie Saettele, CMT 

Commodity  Analysis: “Gold’s rally reversed gains after running into former lows and channel resistance. Gold’s advance is better than silver’s, which remains extremely depressed. Daily RSI on the metal has recovered to 60, a common area for the indicator to stop in a bear market.” Watch for resistance at 1322.

Commodity Trading Strategy: Flat

LEVELS: 1224 1244 1287 1322 1348 1365

Closing Gold & Silver Market Report – 8/8/2013

CHINESE TRADE GROWTH LIFTS MARKETS

Precious Metals experienced a solid boost today as a weaker U.S. dollar pushed Gold up by more than $25 an ounce. Strong import data from China along with positive economic reports from the eurozone weighed down the dollar, giving metals an unexpected lift.  Lower prices caused physical demand for Gold to rise by 2.5 percent  in July compared with the same time last year. Following today’s price jump, some analysts are challenging the anti-Gold sentiment that has taken hold of those investors who have moved into bearish expectations following the metal’s recent price correction. One expert referred to Chinese data and U.S. jobs numbers and their impact on Precious Metals by stating, “There were pretty strong bets that Gold was going to continue to go down. With the news coming out, [...] I think the mind set is changing a bit.” 

U.S. stocks were able to reverse their three-day losing streak Thursday. The strong trade data from China influenced today’s modest gains in equities markets and is expected to be positive for worldwide GDP. Federal Reserve stimulus tapering is still at the forefront of investor awareness, which could cause shaky trading in the coming weeks. However, the  potential for cuts to quantitative easing is causing optimism  among some market experts like Anastasia Amoroso, Global Market Strategist at JPMorgan Funds, who stated, “One thing to keep in mind is if the Fed does actually reduce the pace of purchases, that is for some very good reasons.”

At 5:04 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,314.00, Up $26.70.
• Silver, $20.32, Up $0.72.

Sudden Dollar Weakness Tapers Early Euphoria, Sends Market Sliding And Spikes Gold

Mid-Day Gold & Silver Market Report – 8/8/2013

OLD RALLY CONTINUES PLATINUM AT TWO YEAR HIGH VS. GOLD

The Gold price held onto its early gains and even added to them as the U.S. dollar sits near a seven-week low against a basket of major currencies. We would have to look back to mid-June to see the last time the dollar was this low. The dip in its value is being blamed on the current Fed policy and a rise in new jobless claims. The inverse correlation between Gold and the dollar is highlighted today as the price of Gold is rising to the occasion and surging back above $1,300.However, of the Precious Metals complex, the real winner today is Platinum. The premium of Platinum, which is used in automobile catalytic converters, rose to a high of $172 per ounce over the price of Gold. The price has been supported by supply threats out of South Africa and a new Platinum ETF in Johannesburg. The new ETF added half a million ounces to its holdings in less than three months.

While Precious Metals are seeing a day of positive gains, the stock market is facing the real threat of the first four day losing streak this year. Strong trade data from China doesn’t seem to be enough to pull the markets up following a poor weekly jobless report. The Dow may actually see its first losing week in nearly two months.  Paul Hogan, manager of the FAM Equity-Income Fund, said, “For a significant move, we need to have some clarity on what the Fed is going to be doing — we need to get to the point where we know when the Fed will be tapering and see that things will be fine economically.” Short of a crystal ball, continued volatility can be expected.

At 1:04 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,312.10, Up $24.80.
• Silver, $20.26, Up $0.66.

Morning Gold & Silver Market Report – 8/8/2013

DOLLAR FALLS TO SEVEN-WEEK LOW

Precious Metals and U.S. stock futures added to early gains after the  release of the weekly jobless claims report.  The report showed that 5,000 new claims were filed, and new claims from two weeks ago were revised upwards.  Continuing jobless claims increased by 67,000.  The U.S. dollar fell after the report to a seven-week low, leading the way for Gold and Silver to continue their climb.

Cleveland Federal Reserve President Sandra Pianalto said Wednesday that the Fed could begin tapering its quantitative easing (QE) program soon,  should recent job market improvements continue, though the comments had little effect on Precious Metals prices. Analysts at HSBC said in a note, “The bullion market's lack of a reaction to Ms. Pianalto's comments may indicate the degree of QE 'tapering' expectations already built into the Gold price.  An announcement by the Fed later in the year to withdraw QE would be seen as less of a surprise for the gold market.”

At 9:52 a.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,296.30, Up $9.10.
• Silver, $20.00, Up $0.41.

Closing Gold & Silver Market Report – 8/7/2013

GOLD UNCHANGED TODAY AS MINERS WEIGH PRODUCTION POTENTIAL 

Precious Metals prices remain relatively flat in today’s trading as the pressure from a potential reduction in quantitative easing measures weighs on the minds of traders and investors alike.Short-term price movement is lacking definitive momentum  as many traders are enjoying time off during the summer months, and there is still the need for more clear-cut economic policy decisions. “We don't expect big positioning until we get more economic data and of course the U.S. Fed meeting in mid-September, which should provide more direction,” Deutsche Bank trader Michael Blumenroth said. With the Gold price at a three-year low, many Gold mining companies are feeling pressure to postpone production. The drop in output and supply has many analysts predicting a rise in price as there continues to be strong demand among physical buyers who are taking advantage of lower prices. Though many mining companies are wavering under the pressure, some organizations like  Randgold Resources are promising to cut costs while increasing output.

Stock prices were trimmed yet again today as investors continue to show concern over the eventual tapering of the Fed’s monetary easing policy. The odd scenario in which  stocks react negatively to positive economic news  has been affecting markets lately. “The economic data is probably coming in a little better than expected, and because of that I think the market’s concerned that’s going to give the Fed the potential to begin tapering in September,” Mike Binger, senior portfolio manager at Gradient Investments LLC, said. When the injections of liquidity are no longer available, strong economic news will be needed if equities markets hope to sustain the rally they have been experiencing so far this year.

At 5:17 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,288.40, Up $3.90.
• Silver, $19.63, Up $0.02.

Gold Bounces Near Term Focus is Still Lower

4Hour

Chart  Prepared by Jamie Saettele, CMT 

Commodity  Analysis: “Gold’s rally reversed gains after running into former lows and channel resistance. Gold’s advance is better than silver’s, which remains extremely depressed. Daily RSI on the metal has recovered to 60, a common area for the indicator to stop in a bear market.” The drop below Friday’s low reinforces the idea that gold is at least in for a deep retracement of the rally from the June low.

Commodity Trading Strategy: Short, trail stop to 1322 (from 1355), targets 1270 and 1235

LEVELS: 1224 1244 1267 1296 1320 1348

Mid-Day Gold & Silver Market Report – 8/7/2013

PRECIOUS METALS NOT SURE HOW TO REACT TO THE POSSIBILITY OF TAPERING MONETARY POLICY

Precious Metals are feeling the heat today as concern is growing that the U.S. Federal Reserve may begin tapering as early as next month. Due to the assumption of the cutback in fiscal policy, the Gold price traded lower this morning and has since had a nice bounce. The market became alarmed after Fed presidents’ comments this week confirming their belief that it is  quite likely to see a reduced amount of monthly bond buying by the end of 2013. The next Fed meeting for a possible tapering announcement is set for September 17-18.

Italy received positive economic news today showing that they are on track for a strong recovery. Economists forecast that in the fourth quarter of 2013 the country’s GDP will return to growth. Federico Ghizzoni, the chief executive of Unicredit, Italy’s largest bank, said, “We believe that the fourth quarter this year will be the first quarter in Italy after many with a positive signal.” Better-than-expected exports have provided assistance in rebuilding business confidence in the economy and will hopefully place Italy in an improved financial situation.

At 1:17 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,286.20, Up $1.70.
• Silver, $19.60, Down $0.01.

Morning Gold & Silver Market Report – 8/7/2013

FED TALK DOMINATES, PRESSURES STOCKS, GOLD

The Gold price fell in overnight trading to a three week low as speculation abounds that the U.S. Federal Reserve will start to reduce bond purchases within the next few months. This is the much debated and much speculated topic of tapering. It is inevitable that the Fed will taper their bond buying as the economy is showing signs of improvement the exact timing is what is unknown.Michael Lewis, head of commodities research at Deutsche Bank, said, “We expect the Fed will taper its asset program from September onwards.”

In continued mixed news, stock futures point to a lower start on Wall Street due to, once again, Federal Reserve tapering talk.  Ava Trade chief market analyst Naeem Aslam said,  “You may think that the tapering talk was already priced into the markets, but traders are certainly not convinced by this idea.” Not everyone agrees however, and many are using the Fed talk as a reason just to sell. Peter Cardillo, chief market economist at Rockwell Global Capital, offers his opinion, “The market has been going down for the past two days in slow volume. I think the market has already priced in tapering.” Regardless of your opinion, volatility abounds in an otherwise quiet trading period.

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

• Gold, $1,278.80, Down $3.70.
• Silver, $19.41, Down $0.21.

Closing Gold & Silver Market Report – 8/6/2013

GOLD HOLDS UNDER $1,300

The Gold price fell to the lowest it has been in three weeks today. A variety of data affected the already embattled Precious Metal until apparent  technical selling at the $1,300 mark kicked in, driving the price even lower. One key factor was the improvement in the trade deficit. The U.S. economy may have grown faster than initially reported in the second quarter as evidenced by the lowest traded deficit in 3-1/2 years in June when exports reached record highs and imports fell. The improvement in European economic conditions and continued stability in China all point to continued growth in the U.S. for 2014 and beyond. These improvements lend a hand to the continued talk of tapering the current QE program.

The summer doldrums are in full effect right now, and the U.S. stock market is not immune. Monday was the lightest volume full trading day of the year. This is partially due to the lack of data and information from earnings reporters and mixed signals from Fed officials.  Ken Polcari, director of the NYSE floor division at O'Neil Securities in New York, said,  “[Fed officials] are all hedging themselves, which is why the market continues to just be a little bit confused and why it is going to churn.” The U.S. dollar showed weakness against the Yen today, and Oil prices came down as well.

At 5:07 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, 1,284.20, Down $20.20.
• Silver, $19.56, Down $0.25.

Gold Sinks into Friday Low Deep Retracement of Rally Underway

4Hour

Chart  Prepared by Jamie Saettele, CMT 

Commodity  Analysis: “Gold’s rally reversed gains after running into former lows and channel resistance. Gold’s advance is better than silver’s, which remains extremely depressed. Daily RSI on the metal has recovered to 60, a common area for the indicator to stop in a bear market.” The drop below Friday’s low reinforces the idea that gold is at least in for a deep retracement of the rally from the June low.

Commodity Trading Strategy: Short, trail stop to 1322 (from 1355), targets 1270 and 1235

LEVELS: 1267 1282 1306 1315 1350 1395

Morning Gold & Silver Market Report – 8/6/2013

DATA CAUSES SNOWBALL EFFECT ON GOLD PRICE

Economic data from the U.S. and Europe pulled the Gold price down in overnight trading.  Sharps Pixley CEO Ross Norman said, “We fell through the psychological support level of $1,300 last night, and it does feel as the prevailing dollar strength is curtailing Gold momentum.  [However,] it is hard to read too much into moves during the summer months as the market can fluctuate widely on very small trades.”  Automatic electronic sale orders were activated when the Gold price fell below $1,300, which furthered the impact of the losses.

Data released this morning by the Commerce Department showed that the U.S.  trade deficit fell to its lowest level in nearly four years.  The combination of lower imports and higher exports caused the gap to shrink to $34.2 billion in June, from $44.1 billion in May.  The U.S. imported a total of $225.4 billion in June, compared to exporting $191.2 billion.

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

• Gold, $1,289.30, Down $15.10.
• Silver, $19.68, Down $0.13.

Closing Gold & Silver Market Report – 8/5/2013

QUESTION REMAINS ON HOW FED WILL APPROACH TAPERING MONETARY POLICY

Today, Gold fell from positive economic data, but was able to stay above its supported level of $1,300 an ounce. The Commerce Department reported that U.S. manufacturing grew in July at its quickest rate in more than two years. “The economy is healing, and if the economy is healing then it doesn't require the assistance of the Fed,” said John Stephenson, who helps oversee about $2.7 billion (CAD) at First Asset Investment Management Inc. in Toronto. “Whether tapering happens tomorrow or next year, it’s coming, and the market knows it.” The U.S. Federal Reserve’s plan to cutback fiscal policy has been the focal point for investors. The announcement created more confusion in the market as mixed economic data continues to be reported, and investors have no sense of what direction the Fed may decide to take. 

Analysts are anticipating economic data out of China this week with hopes that the country is heading out of a financially difficult time. Released over the weekend and providing a great start to the week, China’s non-manufacturing Purchasing Managers’ Index indicated growth in their service sector. “Markets will focus on industrial production and trade this week, with a particular focus on exports. Expectations are subdued, which means it will not be difficult to exceed them,” Dariusz Kowalczyk, senior economist and strategist at Credit Agricole, said. Raymond Yeung, senior economist at ANZ, is not convinced by the data, saying, “We expect that all these real activity data to remain on a downtrend.”

At 5:07 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, 1,304.00, Down $8.50.
• Silver, $19.76, Down $0.25.

Gold is Vulnerable on Channel Break

4Hour

Chart  Prepared by Jamie Saettele, CMT 

Commodity  Analysis: “Gold’s rally reversed gains after running into former lows and channel resistance. Gold’s advance is better than silver’s, which remains extremely depressed. Daily RSI on the metal has recovered to 60, a common area for the indicator to stop in a bear market.”

Commodity Trading Strategy: Triggered short at 1312, 1355 stop, targets 1270 and 1250

LEVELS: 1267 1282 1306 1315 1350 1395

Morning Gold & Silver Market Report – 8/5/2013

GOLD HOLDING ABOVE $1,300

The Gold price is tentatively holding above $1,300 an ounce on Monday as the U.S. dollar showed signs of softening due to mixed U.S. data last week. Euro zone data showed business expanded for the first time in 18 months putting pressure on the dollar. In addition, strong GDP and factory data offset weak hiring data helping the Precious Metal finish above $1,300. As always, the topic of the Federal Reserve’s Quantitative Easing tapering schedule comes into play and seriously affects the price of Gold.  Societe Generale analyst Robin Bhar said,  " We had a good rally on Friday that seems to have stalled now as the timetable for tapering remains unclear and obviously investors will be watching the data that is coming through now for clearer direction.”

Internationally, global stock priced inched up in overnight trading on the weaker dollar and conviction that the U.S. Federal Reserve will maintain its current stimulus program.  Mike van Dulken, head of research at Accendo Markets, said, “The market is getting some support as the (U.S. stimulus) tapering timetable is likely to be changed." There is growing evidence that central bank policies are driving the economic recovery around the world and supporting riskier assets. The fear of tapering by the U.S. has slowed that down some but not completely. Mark Keenan, cross-commodity research strategist at Societe Generale said, " Markets are very much driven in the immediate future by the data that gives us an idea as to when the (Fed) tapering is going to start taking effect."

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

• Gold, $1,308.50, Down $4.00.
• Silver, $19.77, Down $0.23.

Weekly Gold & Silver Market Recap – 8/2/2013

GOLD BUILDS MOMENTUM DURING  TYPICALLY  SLOW SEASON

While summer tends to be a slower time of the year for trading stocks, the week began with promises to be a bit more interesting. The week brought yet another U.S. Federal Reserve meeting for a market hopeful for clarification on tapering the economic stimulus program. The Gold price began overnight trading with a dip, but rebounded nicely Monday morning as it posted gains,  building on a three week positive run. The same factors that are giving equity investors a reason to doubt, and therefore are driving markets lower, are supporting Gold prices. As the U.S. dollar suffers, dollar priced commodities like Gold become easier to afford.  Likewise, as the dollar strengthens, the opportunity cost for buying Gold increases, making it more expensive to buy the Precious Metal. Saxo Bank senior manager Ole Hansen said, " This week offers several opportunities to test whether the rally can be sustained with the central banks' meetings and the U.S. non-farm payrolls on Friday."

WHO WILL REPLACE FED CHAIRMAN BEN BERNANKE?

Speculation surrounding the end of U.S. Federal Reserve Chairman Ben Bernanke’s time at the central bank,  has now turned to his successor. According to analysts, the markets are expecting it to be Janet Yellen, who has been in favor of the Fed’s recent highly-accommodative monetary. However, new reports have revealed that former Treasury Secretary Larry Summers may be President Barack Obama’s choice, which could cause a shock to the markets. David Forrester of Macquarie Bank said, “If Summers is appointed, then we [may] see markets correct as tapering will be expected to happen more quickly … Yellen is a Fed insider and was part of the Federal Open Market Committee when QE [quantitative easing] was being implemented, while Summers questions the efficacy of QE.”

SILVER DEMAND INCREASING IN ASIA INDIA HAS  GOLD  SUPPLY ISSUES

A Silver vault that can hold 200 metric tons opened in Singapore this week.  In 2012, the Singapore government decided to support the buying of Precious Metals and removed a seven percent sales tax on investment-grade purchases. Singapore’s goal is to grasp 15 percent of the world’s Gold demand, up from their current average of two percent. Data from the World Gold Council and the Silver Institute shows that about 50 percent of Silver is used in industry, primarily for photography and electronics.

Physical demand for Gold in India, the world’s largest consumer of the metal, increased this week as the country’s central bank instituted new rules in an attempt to reign in its swelling trade deficit. Due to new restrictions, Bachhraj Bamalwa of All India Gems and Jewellery Trade Federation explained, “Premiums are increasing as there is no Gold available.” One trader in Singapore added, “No one in India is able to import for now, due to the new regulations and a lack of clarity on the operational procedures.” Demand is still very high in India and will only grow with supply issues for citizens.

FED ANNOUNCEMENT SUPPORTS METALS

Wednesday afternoon Precious Metal prices rebounded from morning losses after the U.S. Federal Reserve announced interest rates would remain unchanged as long as the economy continues to improve at its current modest pace. “There is nothing in the latest [Federal Open Market Committee] statement released today to suggest that Fed officials have changed their minds about starting to taper the monthly asset purchases in September,” Capital Economics chief U.S. economist Paul Ashworth said. The key difference from the FOMC last meeting is that Fed chairman Ben Bernanke’s economic growth outlook went from moderate to modest. This adjustment may indicate the Fed is concerned about unexpected economic changes in the near future.

Precious Metal prices extended gains on Thursday following the Fed statement Wednesday and the overnight release of China’s purchasing manager’s index. Peter Garnry of Saxo Bank said, “The drivers are both the more dovish tune from the Fed and better-than-expected PMI figures from China overnight. If you take those two events and combine it with a good earnings season with few profit warnings, then  you have the right mix for a positive market.”

JOBS DATA DISAPPOINTS GOLD RECOVERS

On Friday, the Gold price rose more than two percent to recover from early losses after the release of the U.S. Department of Labor’s nonfarm payrolls report. The disappointing number of jobs added to the economy missed targets by nearly 20,000.The unemployment rate fell to 7.4 percent however, that is partly due to Americans leaving the workforce. Todd M. Schoenberger of LandColt Capital said, “Today’s jobs data is terrifying for Main Street. Despite the proactive actions from the Fed and stimulus help from Capitol Hill, the labor market remains stuck in quicksand. For Wall Street, however, this is terrific news.”

The recovery in the Gold price from overnight selling was  due to the impact the jobs report will likely have  on the U.S. Federal Reserve’s quantitative easing (QE) decisions. Alfonso Esparza of OANDA said that if the jobs report disappoints, it “would confirm the Fed’s worries in the latest Federal Open Market Committee minutes and in the statements made by its members. Quantitative tapering will likely be pushed to next year if the American recovery appears to be losing momentum.”

GOLD STEADIES AS JOBS REPORT EXPECTED TO INFLUENCE CONTINUED QE

Gold remained steady on Friday after a turbulent morning of trading. An initial dip, caused by bearish investors predicting a reduction of quantitative easing next month, was followed by a quick rebound prompted by weak jobs data. “There is a bit of ambiguity in the numbers because the unemployment figure is at multi-year lows but all-in-all I think Gold may be able to hold above $1,300 [per ounce] in the coming sessions as the data is changing what people were thinking about the tapering story and the timing of it,” Standard Bank analyst Marc Ground said. As  Precious Metals markets have been relatively flat  this week, investors will begin gearing up for potential monetary policy announcements that could create more volatility in metals and stock markets.

At 5:03 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,313.20, Up $0.00.
• Silver, $19.96, Up $0.25.

Mid-Day Gold & Silver Market Report – 8/2/2013

GOLD STEADIES AS JOBS REPORT EXPECTED TO INFLUENCE CONTINUED QE

The Gold price remains steady at mid-day after a turbulent morning of trading.  An initial dip, caused by bearish investors predicting a reduction of quantitative easing next month, was followed by a quick rebound prompted by weak jobs data. “There is a bit of ambiguity in the numbers because the unemployment figure is at multi-year lows but all-in-all I think Gold may be able to hold above $1,300 [per ounce] in the coming sessions as the data is changing what people were thinking about the tapering story and the timing of it,” Standard Bank analyst Marc Ground said.  AsPrecious Metals markets have been relatively flat  this week, investors will begin gearing up for potential monetary policy announcements that could create more volatility in metals and stock markets. 

Following a benchmark day for stocks in which the S& P 500 rose to a new record high, equities prices are trading down heading into the weekend.  Employers added fewer-than-expected jobs during the month of July, causing investors to pause after yesterday’s rally.  Though the  addition of 162,000 jobs last month is the smallest amount in four months, John Manley, chief equity strategist for Wells Fargo Fund Management, said, “This number isn’t an earth-shaker.  It is debatable if it was good or bad. It was OK. The number still indicates the [U.S. Federal Reserve] is going to be there for a while, that is not bad.”

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

• Gold, $1,314.00, Up $0.80.
• Silver, $20.02, Up $0.31.