Gold Continues to Tread Water into the Weekend

Gold Continues to Tread Water into the Weekend

Commentary for Friday, May 8, 2015 ( www.golddealer.com) – Gold closed up $6.70 on the Comex today at $1189.10. And considering all the gold indecision out there it’s interesting that we finished up $14.50 on the week.

The dollar has been generally weaker this week – the Dollar Index trading from a high around 96.00 to a low around 94.32 – right now we are looking at 94.79. This has supported gold’s current trading range between say $1180.00 and $1200.00.

And today’s close ($1189.10) is once again closing in on the important 50 Day Moving Average in gold ($1191.00) – still the physical market lacks significant buzz.

The much talked about April Jobs Report was great for the stock market but a non-event for gold. I’m surprised we did not get more reaction – there was a slight upward bias to gold in the paper market before this information released but not much pop after the fact. So like I said yesterday this turned out to be a tempest in a teapot.

Psychologically gold traders may be disinterested. The good news about jobs created a big pop to the upside in stocks and this may have distracted traders.

This lack of movement on actionable news may also indicate gold is tired going into the weekend and the “interest rate increase” scenario has been talked to death – this is perhaps the most promising answer.

Note the trader skepticism in the following Reuters article. Believe it or not this is good for the gold market because if physical demand supports current levels and we continue bounce between $1140.00 and $1200.00 this market may yet dispel this indecision.

A flat and tight trading range for gold is not a very exciting prospect here in America but the idea of adding to gold holdings at lower prices is big with our friends in China and India.

My scenario of a steady, more reliable and narrowly traded price in gold may yet win the value race. And gold price stabilization would be big for the alternative currency crowd and perhaps even bring gold more into the investment mainstream.

This from Jan Harvey (Reuters) – Gold prices edge higher after U.S. payrolls data – Gold rebounds after two-day losing streak – Dollar weakens after U.S. April payrolls report – Rise in payrolls revised downward in March – “Gold edged higher on Friday, snapping two days of losses, as revisions to U.S. payrolls data supported speculation that the Federal Reserve may hold off raising interest rates in the immediate future.

U.S. job growth rebounded last month and the unemployment rate dropped to a near seven-year low of 5.4 percent, potentially keeping the Federal Reserve on track to hike interest rates this year.

However, March payrolls were revised to show only 85,000 jobs created, the smallest number since June 2012. Mixed economic data has pushed earlier expectations for the Federal Reserve to announce a rate rise at its June policy meeting back to later this year.

Spot gold was up 0.1 percent at $1,186.10 an ounce at 1400 GMT, while U.S. gold futures for June delivery were up $3.00 an ounce at $1,185.20. As gold pays no interest, a potential rise in returns from U.S. bonds can weigh on its price.

"The U.S. payrolls number were very close to consensus, but there were downward revisions, so the back data was a little worse than people were expecting," ING commodities analyst Hamza Khan said. "This was a fairly supportive report for gold prices, in the end."

The dollar pared earlier gains against a basket of currencies after the data, though U.S. stocks opened higher on the evidence of an uptick in the economy.

Gold prices have been stuck in a narrow range of around $50 an ounce since mid-March, as uncertainty over U.S. monetary policy pushed buyers to the sidelines. A failure to sustain a push above $1,200 an ounce last week is also weighing, traders said.

"The more we do not break upside resistance, the more the chance of a bid sell-off," Afshin Nabavi, head of trading at MKS in Switzerland, said. "I think $1,100 should be tested sooner rather than later."

Reflecting investor anxiety, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Shares, fell 2.7 tonnes to 739.07 tonnes on Thursday.

Silver was up 0.5 percent at $16.37 an ounce, platinum up 0.6 percent at $1,134.74 an ounce and palladium up 1.9 percent at $792.15 an ounce. Earlier palladium hit its highest in two months at $798 an ounce.

South Africa's National Union of Mineworkers (NUM) said on Friday it was shocked by platinum producer Lonmin's plan to cut mining jobs and would fight the decision. The company has said it is in talks with unions and employees to cut 3,500 jobs at its mines in South Africa.”

Silver closed up $0.17 at $16.44. Silver was up $0.33 on the week and physical action was steady but not very inspiring – $1000 face 40% clad bags are cheap. The most interesting silver fact this week was the jump in 2014 jewelry demand – now at new highs of 215 million ounces.

Platinum closed up $11.00 at $1142.00 and palladium closed up $17.00 at $802.00. Platinum was up $12.00 on the week and her little sister palladium was up $28.00.

Our Patented Employee Survey – Gold's Direction Next Week?

Of course it's not really patented but we do have some fun along the way. This is what the GoldDealer.com employees think – 6 believe gold will be higher next week – 2 think gold will be lower and 3 believe it will be unchanged.

Our Patented Customer Survey – Gold's Direction Next Week?

Like the employees our customers were given three choices – up – down – unchanged. We limited the survey to a random sampling of 100 transactions – unscientific but worth considering because these people took action: 49 people thought the price of gold would increase next week – 37 believe the price of gold will decrease next week and 14 think prices will remain the same.

Precious Metal Closes & Dollar Strength – May 04 – May 08

The walk-in cash trade was slow and so were the national phones – interestingly enough however the Activity Scale remains solid ( 5) and for some reason there was a rush in the public’s buying of physical gold early in the day.

Considering the uncertainty created between a possible Federal Reserve rate hike and the poor technical picture presented in gold (the bears still being in charge) the physical market remains attractive enough to some buyers to keep the across the counter action steady into the weekend.

The GoldDealer.com Unscientific Activity Scale is a “ 5” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday – 6) (Tuesday – 3) (Wednesday – 5) (Thursday – 4). The scale (1 through 10) is a reliable way to understand our volume numbers. The Activity Scale is weighted and is not necessarily real time – meaning we could be busy and see a low number – or be slow and see a high number. This is true because of the way our computer runs what we call the “book”.

Our “activity” is better understood from a wider point of view. If the numbers are generally increasing – it would indicate things are busier – decreasing numbers over a longer period would indicate volume is moving lower.

When buying or selling you will receive an email confirmation. This includes a PDF File to confirm your invoice or purchase order and includes forms of payment and bank wire instructions. When doing business please check to see if your current email has been entered into the new system and check to see if your computer will accept our email (no spam).

We always appreciate keeping us up to date when moving or changing your email.

We believe our four flat screens downstairs with live independent pricing (BullionDesk.com) are unique in the United States. The walk-in cash trade can see in an instant the current prices of all bullion products and a daily graph illustrates the range of the markets on any given day.

Yes – you can visit the store with cash and walk away with your product. Or you can bring product to the store and walk away with cash. We will even wire funds into your account that same day for a small service fee ($25.00) if you are in a hurry.

In addition to our freshly ground coffee we offer complimentary cold bottled water, Cokes and Snapple. We also provide fresh fruit in a transparent attempt to disguise our regular junk food habits as we sneak down the block for the best donuts in the world (Randy’s).

Like us on Facebook and follow us on Twitter @CNI_golddealer. Sal is now in charge of our Facebook page and he is a self-proclaimed expert on gold conspiracy theory. He would be happy to respond to even the most ridiculous conspiracy assertion on our Facebook page so why not join the fun?

Thanks for reading – we appreciate your business and enjoy your Mother’s Day weekend!

Disclaimer – The content in this newsletter and on the GoldDealer.com website is provided for informational purposes only and our employees are not registered financial advisers. The precious metals and rare coin market is random and highly volatile so it may not be suitable for some individuals. We suggest before deciding on a course of action that you talk with an independent financial professional. While due care has been exercised in development and dissemination of our web site, the Almost Famous Gold Newsletter, or other promotional material, there is no guarantee of correctness so this corporation and its employees shall be held harmless in all cases. GoldDealer.com (California Numismatic Investments, Inc.) and its employees do not render legal, tax, or investment advice.

Leave a Reply