Gold Bounces Higher on Dollar Weakness, Rumors from Europe and Short-Covering

Gold Bounces Higher on Dollar Weakness, Rumors from Europe and Short-Covering

Commentary for Wednesday, Nov 6, 2013 (www.golddealer.com) – Gold closed up $9.70 at $1317.70 as the dollar reconsiders recent gains and traders wonder what is really happening in Europe. Tomorrow the European Central Bank is expected to announce changes in recent monetary policy. Most expect a more accommodative stance (read continued lose money policies) as a result of slow economic conditions.

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Still gold remains in a mostly sideways trading pattern holding above the important $1300.00 mark but not showing any real fire-power as far as momentum so this market remains uncommitted. The US economy continues to show some life as LEI (Leading Economic Indicators) was up 0.7%. That figure however was somewhat discounted because it happened before the government shutdown.

Silver was up $0.14 at $21.75 and there was a pop to the upside in our 100 ounce bar sales (possibly due to cheap premiums).

Platinum closed higher by $17.00 at $1465.00 and palladium was also higher by $15.00 at $764.00. A union official was shot and killed at the Lonmin mine in South Africa as ugly labor problems once again make life miserable for mine workers.

According to MarketWatch “The U.S. dollar fell Wednesday as investors focused on research suggesting that the Federal Reserve lower its 6.5% unemployment-rate threshold for raising short-term rates, which would effectively keep those rates near zero for longer than currently expected. The research, led by Fed economist William English and highlighted earlier this week by Goldman Sachs, comes ahead of the U.S. October jobs report due Friday that is expected to show a slight increase in the jobless rate, to 7.4% from 7.2%, according to a MarketWatch poll. It also solidified a continued message from the Fed this year that an eventual slowing of its monthly bond purchases, currently set at $85 billion, won’t lead to a rise in interest rates.” “Even as we approach a period when tapering is likely to begin, the overall core message from the Fed is likely to be that interest rates are on hold for a long time,” said Camilla Sutton, chief foreign strategist for Scotiabank.”

The reason gold is firm today is because of the information contained in the first portion of this MarketWatch post: the dollar is weaker. But the really interesting comment by Scotiabank did not get much publicity and it should have because it raises a question about the Federal taper. Suppose the Fed tapers (it will be forced to sooner or later) but at the same time keeps interest rates low? The taper would of course pressure gold to the downside initially even though many traders now believe that when the $85 billion monthly is reduced gold will already have this change factored into the trade. Now according to the Keynesian approach continued low interest rates (cheap money) supports the current government engineered recovery but these also support perhaps even encourage gold ownership: just another thought over your morning coffee.

Our Activity Scale was an improving “3” today but the “feel” of both the walk-in cash trade and the national phone business is not impressive: to give you an idea of what I mean getting a day off is now pretty easy. The CNI Activity Scale takes into consideration volume, open and closed orders (buying and selling), the cash trade, and the hedge book: (last Thursday – 3) (last Friday – 3) (last Monday – 3) (last Tuesday – 2) (Wednesday – 3). The scale is 1 through 10 and we believe this is a reliable way to “sense” what a real bullion business is doing without the sales pitch. Phase One of our new golddealer.com website will be delayed another week (November 11th) and now I am beginning to feel like the President. It will also include Live Chat, you will be able to set up your own customer account, receive automatic email confirmation, and ask for daily Gold Newsletter email if you have the nerve.

Phase Two will make accounting, shipping and tracking even easier (check to see if we have your email address in the new system). We now offer the choice of USPS or FedEx Ground. Our new flat screens within the CNI Building are operational and the cash trade loves this idea. The feed and graphs are live and bullion products are programmed with premium spreads: there is nothing like this on the West Coast and visitors enjoy complete transparency.

Like us on Facebook and follow us on Twitter @CNI_golddealer. And remember our Daily Gold Newsletter archive is now part of our Facebook page.

Remember our best price guarantee (both buying and selling) so call Kenny at 1-800-225-7531. Thanks for reading and enjoy your evening. These markets are volatile and involve risk: Please Read Before Investing

Written by California Numismatic Investments (www.golddealer.com).

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