Commentary for Wednesday, April 9, 2014 – Gold closed down $2.20 at $1305.50 giving up a portion of yesterday’s $10.70 gain but the market has a negative bias in overnight trading and seems to have interpreted the FOMC (Federal Open Market Committee) minutes as somewhat bullish for gold. Gold held the important $1300.00 level and stayed above its 200 day moving average ($1296.00) but seems lackluster given the Russian problem. Last week’s support at the $1282.00 level remains encouraging but gold must reassert itself or capitulate to the bears as there is considerable resistance at the 50 day moving average ($1310.00). At this point it still does not seem likely the Fed will alter the tapering program and so less quantitative easing into the summer months (a typically slower time for the metals) will offer market drag.
Silver closed down $0.29 at $19.75 so again under $20.00 and like gold, silver must rearrange the deck chairs or suffer a slow grinding lower as “no news” moves investor attention elsewhere. We have seen several large silver bullion sellers recently and while I originally thought this might signal further short-term weakness a savvy trader friend of mine claimed it might just be tax selling. Today the 10 oz silver bar and the 1 oz Silver round was popular with investors.
Platinum closed down $3.00 at $1437.00 and palladium up $7.00 at $782.00. There is still some tension in the PGM metals and both platinum and palladium seem undervalued. Also keep an eye on rhodium, a backwater investment today but I have big expectations. We are currently selling the Baird Rhodium 1 oz bar at $1285.00.
This from Ed Steer’s Gold and Silver Daily: “Holdings of the world’s largest platinum-backed exchange-traded fund, Johannesburg’s NewPlat ETF, breached 1 million ounces for the first time last week, data from the fund showed, as a strike in the South African platinum sector prompted new buying. NewPlat, launched less than a year ago by Absa Capital, grew within four months into the largest ETF of its kind as concerns over labour issues in the republic and the appeal of a rand-denominated fund fuelled buying from South African investors. It currently holds nearly twice as much platinum as the second largest fund, New York-listed ETFS Physical Platinum.”
If you look at gold’s 60 day price movement it begins to look like we continue to “wander” between say $1280.00 and $1380.00. Twice during that time the bulls were in charge for short periods and once a more sustained bearish trend tested recent lows. The rest of the trading was pretty much flat with both sides not able to gain an advantage.
This type of trading does not lend itself well to the physical side because the public’s attention span is short and with this boring interchange it is difficult for the gold newsletter to create buzz.
What is important during this time is the developing and serious problem with Russian mischief. A factor which initially created buzz but quickly turned into yesterday’s news. This incursion should have created more push to the upside for gold so when it was pretty much ignored I think traders began to believe the gold market was just tired.
Now look at the dollar index during this same period of time and you will see that it traded on both sides of 80.00 and yesterday’s weakness pushed gold above the important $1300.00 mark. Today a stronger dollar was a contributing factor to lower gold. The problem with dollar driven gold action is that because there is still no developed trend over the longer term (1 year) this metric looks random and so day to day action is mixed.
So what will this tell you about the price of gold? I think this market is ripe for bear market raids which from time to time will continue to test the physical market. The “short” influence is strictly money driven and can correct itself quickly. The real physical market then will be subject to such nonsense until gold has really bottomed and the general trend is no longer sideways but established in a relatively gradual uptrend.
From Ed Steer’s Gold and Silver Daily – “India’s gold imports in March rose to nearly 50 tonnes, the highest since the Reserve Bank of India’s import curbs came into force in May last year, according an estimate by the the All India Gems and Jewellery Trade Federation, an organisation that caters to more than 300,000 jewellers. Last month, Indian imported around 25 tonnes of gold, despite the curbs on the precious metal. With India’s central bank allowing more private banks to bring in the metal, importers had rushed in with their orders, he added. Moreover, with prices moderating in the local market, amidst expectations that the curbs might be lifted any time soon, traders said gold imports could stay high for some more time. Finance minister P Chidambaram has indicated that the government could further ease restrictions on gold imports, and that the relaxations made a few days ago when more banks were allowed to import gold, was the first in a series of measures unrolled by the government to relax curbs. This article, filed from Mumbai, was posted on the mineweb.com Internet site yesterday sometime.”
The walk-in cash market was again slow with virtually no fanfare. And the phones moved from average to slow and back again with not much commitment.
The GoldDealer.com Activity Scale is a “4” for Wednesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Thursday – 4) (last Friday- 4) (Monday – 6) (Tuesday – 3). The scale (1 through 10) is a reliable way to understand our volume numbers.
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