Commentary for Friday, Aug 2, 2013 (www.golddealer.com) – Gold closed down only slightly off $0.40 at $1310.60 today but none the less it was a big day because early pressure could have created more than a big problem. Gold moved below $1300.00 on the possibility that a big employment number would encourage the Fed to look closer at the easing program and faded quickly reaching $1282.00 before reversing direction and eventually closing almost unchanged on the day.
Silver was higher by $0.29 at $19.90 and again the majority are buyers and volume numbers are only average considering this market is entering the really cheap range.
Platinum closed up $8.00 at $1540.00 and palladium closed down $2.00 at $730.00. And like silver both platinum and palladium are cheap relative to gold yet the public attention remains soft. I am surprised that platinum has gained so little play of late given the lower prices and more importantly the markets have pushed the premium price over gold to $140.00. With mining problems in South Africa now a given and huge worldwide car sales I just don’t understand this dynamic. And if you buy into the idea that Europe and the US are clawing their way out of the latest economic slump you would have to be a big platinum buyer.
I did not like the break to the downside in gold overnight (Hong Kong and London) which looked at the $1280.00 range before recovering in the domestic market. I know these markets are criticized as thin but taking the wider view the short term technical picture has turned from positive to neutral. On the positive side the Fed itself is still confused as to whether the numbers warrant tapering. And even if they experiment on the shorter term they are playing with fire.
Believe it or not there are some who believe the entire Federal experiment will make no difference and higher prices in gold will depend solely on returning inflation. A safe bet but there are a great many more things which could push gold besides a pure numbers stream. The world has never been a safe place but today the danger could be in the extreme. The latest news on the NSA/Snowden debacle is disappointing in that all this telephone and email collection might be a waste of time and a privacy rights invasion to add insult to injury.
Still the mood for metal traders has darkened and will take further upside strength to get back on track. I like what Peter Hug (Kitco) has to say: Breaking ‘Bad’ – The wedge broke south as the bullish camp were unable to generate the momentum to carry the market higher solely on the continued stimulus story. Traders overseas are now focused again on the US dollar horse being the healthiest in the glue factory as Draghi indicated that systemic risk continues to exist in the EU. The bet is for continued appreciation in the equity markets, which continues to suck investment flow from the commodity space. There are events coming in September; German elections and USD debt ceiling debates, which may create enough turbulence to encourage a medium term push. But until/if gold regains the $1,300 level the short term, technicals point lower. I suggest a $1,282-$1,297 range today.
And now the famous Kitco Gold Survey: Survey Participants See Lower Gold Prices Next Week – Weaker gold prices are expected next week, despite the market’s rebound on Friday following a lower-than-expected U.S. jobs report, a majority of participants in the Kitco News Gold Survey said. In the Kitco News Gold Survey, out of 36 participants, 21 responded this week. Of those 21 participants, six see prices up, while 11 see prices down and four see prices moving sideways or are neutral, meaning 28.6% were bullish, 52.4% bearish and 19% neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts. Last week, 57% of the market participants were bullish. As of noon EDT Friday, prices on the week were down about $10 on the week. As of July 26, survey participants have been correct five weeks in a row. Those who see weaker prices said the lack of a strong upside trend leaves gold vulnerable to selling. Kevin Grady, owner of Phoenix Futures and Options, said he sees prices weaker next week. “I think the market place is setting up for the Fed announcing tapering in September…. I personally don’t believe they will taper in September, but you can’t trade that way. You have to trade on the perceptions of the marketplace and people are positioning for a September tapering,” he said. Phillip Streible, senior commodities broker, R.J. O’Brien, said he expects prices to rise next week. “The reaction to the payroll number was a game changer for gold and put it back on the trader screens. We should see gold start trending higher again as the likelihood of the Fed tapering early has diminished,” he said. The participants who are neutral or see prices moving sideways said thin market conditions could leave prices range-bound.
Walk in and phone business was moderate to slow today and the big pop in phone sales we saw late yesterday has also moved south so the buying public may be as confused as the floor traders. Thanks for reading and enjoy your weekend. These markets are volatile and involve risk: Please Read Before Investing
Written by California Numismatic Investments (www.golddealer.com).