Commentary for Friday, July 25, 2014 – Gold closed higher by $12.50 at $1303.10 going into the weekend. The gold market continues to drift since Thursday’s loss but today’s higher close is encouraging.
The overnight gold market in Hong Kong and London did develop a slight upward bias which continued into today’s domestic play as gold regains the important $1300.00 level.
This looks more like a corrective bounce in prices and perhaps some support from the continuing Gaza and Ukraine conflict – no one really wants to be short with this kind of world tension going into the weekend.
So short-covering is in order as the market continues to reassess recent losses.
There is a nice upward channel forming in gold from recent lows in the $1289.00 area but even with today’s positive close the market remains defensive. The bulls are under assault because gold has broken through its 100 day moving average.
And there may be another factor to soon consider. CNBC this morning claims new metrics indicate that as much as 70% of the S & P is overvalued. I would take this with a grain of salt in that I believe a great deal of recent good news in the stock market is fueled with cheap money.
And the Fed is committed to keeping the status quo – low interest rates until the economy is on better footing. At any rate if the stock market begins to look weak gold will benefit and if stocks actually slide gold will benefit a great deal. No big deal as yet but something to watch.
In the short term it looks like neither the bulls nor the bears dominate – but Thursday’s loss needs to be resolved so the key metric this morning will be gold’s 200 day moving average which is about $1287.00. Stay above that mark (like today) and gold has survived a bear raid – move below that number and we could be in for a test of the $1240.00.
An important factor this bounce to higher ground is its 50 Day Moving Average ($1293.00) – and there is now significant consolidation between $1293.00 and $1296.00 with an upward bias in today’s close. Today’s close above the 50 Day Moving Average makes the bulls happy.
Still gold remains range bound between $1200.00 and $1400.00. For paper traders any volatility within this range is like money in the bank – quickly tradable and also quickly defensible.
For physical players this is a good place to build core positions especially because gold is now discounted about 30% from all-time highs.
Silver closed up $0.21 at $20.58 with mostly small to mid-size deals both ways.
Platinum was up $5.00 at $1478.00 and palladium was up $11.00 at $880.00.
The Weekly Precious Metal Closes – July 21 through July 24 – 2014
Gold Silver Platinum Palladium
Mon $1313.70 $20.96 $1493.00 $876.00
Tues $1306.10 $20.96 $1483.00 $874.00
Wed $1304.50 $20.95 $1485.00 $873.00
Thurs $1290.60 $20.37 $1472.00 $869.00
Fri $1303.10 $20.58 $1478.00 $880.00
I am a big fan of closing prices instead of trading ranges and this type of information will keep us focused on real changes in the market. People really enjoyed the American Gold Eagle 1/10th oz today.
Technically gold broke down this week losing its 100 day moving average but nicely recovered short-term – so on the week down $10.00 but recovering the important $1300.00 level.
Silver held a tight range but lacks the physical follow through to move higher – so finished the week off $0.38.
Platinum also held a tight range and on the week platinum lost $15.00.
The latest mining news might provide longer term clues. “No meaningful production” at Lonmin following the strike and unit costs per PGM ounce year-on-year are expected to increase more than 60 percent, including special costs, the company added.
Palladium like platinum traded within a very tight range gaining $4.00 on the week. Palladium has fared nicely consider more bullish news out this week regarding its use in the auto industry.
Gold’s Next Week – Our Singularly Unscientific Employee Survey
We are also beginning to track the opinion of individual GoldDealer.com employees as to their opinion on the direction of gold next week.
They were offered three responses – UP – DOWN – FLAT.
Ten people offered an opinion – four believe the price of gold will move higher next week – two believe the price of gold will move down next week – and four employees believe the price of gold will remain flat next week.
SINGAPORE, July 25 (Reuters) – “Gold retained sharp overnight losses to trade near a five-week low on Friday and was headed for a second straight week of losses, as strong global economic data offset the metal’s safe-haven appeal.
Gold’s decline despite simmering tensions in the Middle East and Ukraine does not bode well for prices in the near term, especially at a time when physical demand in Asia is sluggish. Spot gold was little changed at $1,292.10 an ounce by 0243 GMT, after losing nearly 1 percent on Thursday. The metal hit $1,287.46 in the previous session – its lowest since June 19 – before recovering slightly. Gold has lost 1.4 percent of its value this week. Silver, platinum and palladium were also headed for weekly losses.
“The next key level to watch is the 200-day moving average near $1,286.00” said one trader in Sydney. “If we break that, gold is likely to see more losses.”
Bullion came under pressure after data on Thursday showed the number of Americans filing new claims for unemployment benefits fell to the lowest level in nearly 8-1/2 years last week, suggesting the labor market recovery was gaining traction.
In China, factory activity expanded at its fastest in 18 months in July, boosting global equities. “Positive economic data put a dampener on the gold market, as risk assets caught a bid and safe-haven buying dried up,” ANZ analysts said in a note. Gold had managed to stay above $1,300 an ounce for most of this week as violence continued over the Gaza strip, and tensions between the West and Russia over Ukraine remained high.
But sentiment has been hit after strong data, with SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, seeing an outflow of 3.6 tonnes on Thursday – the biggest one-day drop in more than a month.
In the physical markets, buying picked up slightly in the previous session as prices dipped below $1,300, but demand was still much weaker than what was seen last year. Data on Thursday showed that China’s net overseas gold purchases through key conduit Hong Kong fell to a 17-month low in June as a weaker yuan curbed demand from the world’s biggest bullion consumer and as direct imports via the mainland flourished.”
Despite the encouraging higher close in gold the walk-in cash trade was average. And national phone action was subdued. That does not mean the public has lost interest because certain sectors (rhodium bars and IRA bullion additions) have remained active.
And questions continue regarding bullion choices. If you look at the GoldDealer.com Activity Scale it has moved from trading in lower half of the Ten Scale to about mid-point so volume numbers are improving. But the average small to mid-size player remains missing in action and perhaps waiting for better prices.
The GoldDealer.com Activity Scale is a “4” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday – 4) (Tuesday – 4) (Wednesday – 5) (Thursday – 5). The scale (1 through 10) is a reliable way to understand our volume numbers.
Email confirmation using a PDF File when buying or selling is functional. It also includes the various forms of payment and includes bank wire instructions. And you can now see your actual invoice or purchase order on your computer screen.
When you buy or sell please check to see if we have your current email on file and that your computer will accept our email (no spam).
About shipping information – when buying or selling your rep will walk you through your current mailing information. Thanks for keeping us up to date if you have moved.
Our four flat screens downstairs with live independent pricing (BullionDesk.com) are a big hit with the cash trade. Live pricing moves all the buy/sell product prices on a real time basis. 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. When buying from us remember if you exceed $10,000 in cash (the real green kind) a Federal Form is necessary.
In addition to our freshly ground organic coffee offered visitors throughout the day we have added cold bottled water and cokes. No popcorn machine as yet and I am working on the In and Out Burger plan again.
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Thanks for reading from your friends at GoldDealer.com and enjoy your weekend.
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